-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OzWLP/OXeEiLzV65xKFS5ckiy0c0DMeDtR//Dzif/AybsBpL7HpO1BfVNXg0BidW EXxWuJCC2BNyaC+dGe1LGg== 0000006814-96-000003.txt : 19960314 0000006814-96-000003.hdr.sgml : 19960314 ACCESSION NUMBER: 0000006814-96-000003 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960301 ITEM INFORMATION: Acquisition or disposition of assets FILED AS OF DATE: 19960313 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: COMFORCE CORP CENTRAL INDEX KEY: 0000006814 STANDARD INDUSTRIAL CLASSIFICATION: COSTUME JEWELRY & NOVELTIES [3960] IRS NUMBER: 362362248 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-06081 FILM NUMBER: 96534135 BUSINESS ADDRESS: STREET 1: 2001 MARCUS AVE CITY: LAKE SUCCESS STATE: NY ZIP: 11042 BUSINESS PHONE: 7084417300 MAIL ADDRESS: STREET 1: 500 CENTRAL AVENUE CITY: NORTHFIELD STATE: IL ZIP: 60093 FORMER COMPANY: FORMER CONFORMED NAME: LORI CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: APECO CORP DATE OF NAME CHANGE: 19850814 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN PHOTOCOPY EQUIPMENT CO DATE OF NAME CHANGE: 19710516 8-K 1 FORM 8-K DATED 3/01/96 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of Earliest Event Reported): March 1, 1996 ------------- COMFORCE Corporation (Exact name of registrant as specified in its charter) Delaware -------------------------------------------- State or Other Jurisdiction of Incorporation 1-6081 36-23262248 ---------------------- ----------------- Commission File Number I.R.S. Employer Identification No. 2001 Marcus Avenue, Lake Success, NY 11042 -------------------------------------- -------- Address of principal executive offices Zip Code Registrant's telephone number, including area code: (516) 352-3200 Not Applicable - -------------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report Item 2. Acquisition of Assets --------------------- On January 18, 1996, COMFORCE Corporation "COMFORCE" or the "Registrant") announced it had entered into a letter of intent to acquire Williams Communication Services ("Williams"), a privately owned company engaged in the technical staffing, consulting and outsourcing business. See Registrant's Form 8-K dated January 18, 1996. On March 1, 1996, COMFORCE Global, Inc., a wholly-owned subsidiary of COMFORCE, executed a definitive purchase agreement (the "Purchase Agreement") and completed the acquisition of substantially all of the assets of Williams (except for certain current assets retained by Williams), for consideration consisting of cash of $2,000,000 and contingent rights to future payments based on earnings over a four year period. The Purchase Agreement has been filed as an Exhibit hereto. The Acquisition of Williams was funded principally by a $2.25 million revolving credit facility established with Chase Manhattan Bank. The Loan Agreement has been filed as an exhibit hereto. Item 7. Financial Statements and Exhibits --------------------------------- a) Financial Statements of Business Acquired As of the date of this Current Report on Form 8-K, it is impracticable for the Registrant to provide the financial statements as required by this Item 7(a). In accordance with Item 7(a)(4) of Form 8-K, such financial statements shall be filed by amendment to this Form 8-K as soon as practicable, but no later than 60 days after March 16, 1996. (b) Pro Forma Financial Information As of the date of this Current Report on Form 8-K, it impracticable for the Registrant to provide the financial statements as required by this Item 7(b). In accordance with Item 7(b) of Form 8-K, such financial statements shall be filed by amendment to this Form 8-K as soon as practicable, but not later than 60 days after March 16, 1996. (c) Exhibits -------- 99.1 Press Release dated March 5, 1996 10.1 Purchase Agreement among COMFORCE Global, Inc., Williams Communications Services,Inc. and Bruce Anderson 10.2 Loan Agreement among COMFORCE Global, Inc. and Chase Manhattan Bank Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunder duly authorized. COMFORCE CORPORATION -------------------- Registrant Dated: March 13, 1995 CHRISTOPHER P. FRANCO - ---------------------- ------------------------ Executive Vice President EX-99 2 PRESS RELEASE EXHIBIT 99.1 FOR IMMEDIATE RELEASE --------------------- COMFORCE Corporation Contact: Mr. Robert Gruber 2001 Marcus Avenue Investor Relations Consultant Lake Success, NY 11042 (212) 628-2554 (516) 352-3200 COMFORCE ANNOUNCES ACQUISITION; COMPLETES REVOLVING CREDIT FACILITY; ESTABLISHES INTERNET WEBSITE Lake Success, NY, March 5, 1996 -- COMFORCE Corporation (ASE: CFS) has completed the acquisition of Williams Communications Services, Inc., based in Englewood, Florida. Williams, which was privately owned, provides technical staffing services to the telecommunications industry. Williams has current annualized revenue of approximately $4.2 million. Payment of the purchase price for Williams was made in cash. Terms of the acquisition were not released. Michael Ferrentino, President of COMFORCE, stated, "The acquisition of Williams is an important step in realizing our strategic goal of becoming the leading provider of staffing, consulting, and outsourcing solutions to the telecommunications industry. The operations of Williams are a natural extension of the core business of COMFORCE. We are pleased that Bruce Anderson, the founder of Williams, will continue to lead the COMFORCE Williams team in Florida." Bruce Anderson stated, "Our partnership with COMFORCE creates a dynamic team, which provides us with substantially greater resources to offer enhanced services to our customers." Revolving Credit Facility - ------------------------- COMFORCE also announced the completion of a $2.25 million revolving credit facility with Chase Manhattan Bank, which was used, in part, to finance the acquisition of Williams. The credit facility is available to fund working capital needs and future acquisition capital for COMFORCE's telecommunications group. Internet Website - ---------------- COMFORCE has established a home page on the Internet's World Wide Web. The COMFORCE Web Site can be accessed at http://www.comforce.com, and features postings of employment opportunities for prospective COMFORCE employees, as well as company information for COMFORCE's customers and investors. Mr. Ferrentino stated, "Our new website is a state of the art marketing tool for COMFORCE as we change the way the world employs its personnel." COMFORCE previously announced the discontinuance of all businesses unrelated to its technical staffing business, and its intention to divest such businesses. COMFORCE's former majority shareholder, ARTRA GROUP Incorporated (NYSE: ATA), has assumed and agreed to discharge all liabilities and obligations of COMFORCE which arose from the discontinued businesses, and ARTRA is entitled to receive any proceeds from the sale of such businesses. On February 27, 1996, ARTRA reported that it is in the final stages of liquidating such discontinued businesses. COMFORCE provides telecommunications, information technology and technical staffing, consulting and outsourcing services worldwide, primarily to Fortune 500 companies, with an emphasis on wireless communications. The strategic vision of COMFORCE is to become the leading provider of staffing, consulting and outsourcing solutions for the information superhighway. # # # EX-10 3 PURCHASE AGREEMENT EXHIBIT 10.1 PURCHASE AGREEMENT PURCHASE AGREEMENT, dated the ___ day of ______________, 19__, by and among COMFORCE GLOBAL, INC. (hereinafter referred to as the "Purchaser"), a Delaware corporation, with its principal office at 2001 Marcus Avenue, Lake Success, NY 11042, and WILLIAMS COMMUNICATIONS SERVICES, INC., a Florida corporation, with its principal office located at 612 North Indiana Avenue, Englewood, FL 34223, Route 1, Box 19A, Wauchula, FL 33873 (hereinafter referred to as the "Seller"), and BRUCE ANDERSON, an individual residing at Route 1, Box 19A, Wauchula, FL 33873, (hereinafter alternatively referred to as "Anderson" or "Stockholder"). WHEREAS, the Seller desires to sell and the Purchaser desires to acquire certain of the properties and assets utilized by Seller in the operation of its business as they exist as of the Closing Date, and to take over such business and operate it thereafter as its own, subject only to certain liabilities enumerated herein, for the purchase price hereinafter described and upon the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of such sale and of the foregoing and of the mutual agreements hereinafter set forth, the parties hereto do hereby agree as follows: ARTICLE I DEFINITIONS 1.1 Certain Definitions. In addition to the terms defined throughout this Agreement (as defined), the following terms shall have the following meanings (such meanings to be equally applicable to the singular and plural forms thereof): "Affiliate" means any other Person which, directly or indirectly, controls or is controlled by or is under common control with such Person and, without limiting the generality of the foregoing, includes (i) any Person which beneficially owns or holds 25% or more of any class of voting securities of such Person or 25% or more of the equity interest in such Person, (ii) any Person of which such Person beneficially owns or holds 25% or more of any class of voting securities or in which such Person beneficially owns or holds 25% or more of the equity interest in such Person and (iii) any director, officer or employee of such Person. For the purposes of this definition, the term "control" (including, with correlative meanings, the terms "controlled by" and "under common control with"), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or by contract or otherwise. "Agreement" means this Agreement together with all exhibits, schedules, supplements and documents as may be attached hereto or incorporated herein by reference. "Billable Employees" means those employees, consultants and independent contractors of Seller who work or perform services who are on assignment to Seller's Customers and for whom a direct charge to the Customer is made. "Business" means providing one or more of a wide range of technical and consulting services to communications, governmental customers and clients through the use of skilled personnel who are generally qualified designers, drafters, engineers, computer programmers, systems analysts, technicians and other skilled personnel. The personnel are generally utilized by the clients and customers on a temporary, project or peak period basis. Primary lines of business activity include information technology, design, drafting, engineering, telecommunications, transmission, switching, CATV systems, OSP and construction, premises network and data services, support services, systems analysis, technical publications, consulting and technical staff augmentation services. "Closing" the consummation of the within transaction including the execution and delivery of all Property, funds, documents, certificates, resolutions, assignments and opinions contemplated in this Agreement. "Closing Adjustment" shall be the adjustments referenced in Section 11.2 of this Agreement. "Closing Date" means the established date for the Closing, which date shall be and mean such other date as shall be agreed upon by the parties. "Customers" those Persons to which Seller has made sales or rendered services during any time prior to Closing and unless the context so requires, any prospective customers. "Escrow Agreement" has the meaning ascribed thereto in Section 3.1(b). "GAAP" means generally accepted accounting principles in the United States of America. "Net Income" means the net operating income of the Business acquired hereunder, before allocation of Federal and State income taxes and the Purchaser's general overhead, administrative and management costs and fees. The operating expenses to be deducted from the revenue of the Business are all expenses incurred by the Business which shall include, but not be limited to, office rental and utility expense, wages, payroll associated costs, deductions and expenses, sales and recruiting expenses, depreciation and interest (but not including interest on any funds used for acquisition of the assets sold hereunder). Interest will be limited to the lesser of actual interest or $10,000 per year. "Person" means an individual, a corporation, a limited liability company, a partnership, an association, a business trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "Primary Contractor" shall have the meaning ascribed thereto in Section 3.1(a). "Property" means all of the following assets of the Company to the extent the same are generally utilized by Company in connection with the operation of the Business as of the date hereof and/or at any time prior to Closing: (a) "General Intangibles" - (i) the sole and exclusive right, to use the names "Williams Communications Services, Inc.", any similar names, and, the sole and exclusive right to utilize any and all of the following associated with, arising out of, relating to or utilized, as of the date hereof, in connection with the Business: any and all trade names, trademarks, copyrights, service marks, logos and slogans (including, without limitation, all registrations, filings and certificates and the sole and exclusive rights to file and/or prosecute any such registrations, filings and certificates) and (ii) all Seller=s right title and interest in computer software, programs, know-how, trade secrets and data bases used in the Business. (b) "Customer Materials" - any and all agreements, orders, requirements and inquiries from or with customers (present and/or past) and/or prospective customers arising out of or relating to the operation of and/or the Business including, without limitation, any and all of such materials from or with any of Customers. (c) "Resumes" - all information for or with respect to current, former or prospective employees in whatever medium that it be manifested, depicted, stored or presented including, but not limited to, paper, hardcopy, computer disks, tapes and databases of the Seller whose services are or have been provided to customers of the Seller prior to the date hereof (collectively "Customers"). (d) "Real Property" - those leasehold interests described on Exhibit "A" annexed hereto and made a part hereof. (e) "Records" - the originals or certified copies of those business or financial records of the Seller, evidencing the Customer Materials, Resumes, General Intangibles, Equipment and/or Company Employees. (f) "Equipment" - all of the furniture and equipment utilized by the Company as set forth on Exhibit "B" annexed hereto and made a part hereof. (g) "Company Employees" - those persons whose services have been provided to Customers by the Company at any time during the last 10 months including, without limitation, the sole and exclusive right to employ such individuals. "Purchase Price" has the meaning ascribed thereto in Article III of this Agreement. "Purchaser" has the meaning ascribed thereto in the Preamble. "Receivables" shall have the meaning ascribed thereto in Section 3.5. "Receivables Collection Period" shall have the meaning ascribed thereto in Section 3.5(b) of this Agreement. "Seller" has the meaning ascribed thereto in the Preamble. "Stockholder" has the meaning ascribed thereto in the Preamble. "U.S. $ or $" means the currency of the United States of America. "Western Region" shall have the meaning ascribed thereto in Section 3.1(a). 1.2 Certain Terms. All references to Articles and Sections herein are to the Articles and Sections of this Agreement unless otherwise specified. ARTICLE II SALE OF THE ASSETS OF THE BUSINESS 2.1 Upon the terms and subject to the conditions set forth in this Agreement including Article VIII and in consideration of the payment to the Seller of the purchase price described in Section 3.1, the Seller hereby agrees to sell, convey, assign and transfer to the Purchaser the following which relate to the Seller's Business of providing qualified personnel in the contract technical services industry to its clients on a temporary or project basis: (a) All contracts and work orders issued pursuant thereto held by Seller with clients for the providing of services and personnel, which are listed in Schedule C hereto. (b) All files and records pertinent, relevant or in any way connected with the performance of services under the contracts referred to in 2.1 (a) above. (c) All sales records and client listings dealing with or pertaining to former or prospective Customers including but not necessarily limited to records of sales calls and follow-ups previously made in connection with the solicitation of business. (d) All personnel files relating to employees wherever located, in whatever form in which they exist and whatever medium maintained or stored, including but not necessarily limited to all payroll records, resume files maintained by Seller including those with respect to personnel previously employed by Seller and those being maintained for possible future use by Seller in the performance and conduct of its business, all payroll records, and year-to-date earning statements and reports. It being agreed that such personnel files, payroll records, earning statements, reports and inventory of resumes are an essential and important element of the assets being purchased herein, Seller represents that it has utilized its best efforts to maintain the files and inventory of resumes in a current and usable condition. (e) The office furniture, fixtures, supplies, brochures, sales material, computer equipment, and any other equipment owned by the Seller wherever located, listed and described in Schedule B which is annexed and made a part hereof. (f) All signs and any and all other similar assets, including without limitation, the name "Williams Communications Services, Inc.", and any variations of such name; good will; and trade names used and usable by the Seller with respect to the conduct of its business. (g) All right, title and interest which Seller has to computer software, programs, know-how, trade secrets and computer data bases utilized in the Business. (h) All keys, combinations, security devices and codes for or with respect to all offices, storage units, vaults, safety deposit boxes of the Seller; (i) The originals or all permits, licenses, consents, authorizations and/or permissions for or with respect to the Business; (j) A copy of all computer software and programs, licenses, data bases utilized in connection with the operation of the Business together with a right to use same; (k) All physical embodiments of the Property; and (l) Executed counterparts, and/or copies, as the case may be, of the instruments and documents required to be delivered to the Purchaser at the Closing as herein provided. ARTICLE III PURCHASE PRICE 3.1 Upon the terms and subject to the conditions, and the performance of Seller's obligations and duties set forth in this Agreement, and in consideration for the conveyance, transfer and assignment of the assets and other rights to the Purchaser as described in Section 1 above, the Purchaser shall pay the Seller the purchase price set forth below: a. The sum of TWO MILLION ($2,000,000) DOLLARS on the date of Closing, provided that Seller has been designated as the "primary contractor" in the Western region of its customer Reltec. For the purpose of this Agreement "Primary Contractor" shall mean the vendor of Reltec which is given personnel requirements prior to any other vendor to Reltec. The "Western Region" shall mean California and all contiguous states. (i) If at the Closing, Reltec has not appointed its vendors for the coming year, or Seller is not the Primary Contractor to Reltec in the Western Region, then Purchaser shall pay to Seller the sum of ONE MILLION THREE THOUSAND ($1,300,000) DOLLARS (including a $100,000 earnest money deposit to be delivered on the date of execution hereof) at Closing and at the same time shall place the sum of SEVEN HUNDRED THOUSAND ($700,000) DOLLARS into an escrow account or multiple accounts to be maintained by James F. McCollum, P.A. in accordance herewith with the Escrow Agreement ("Escrow Funds"). The Escrow Funds will be released to Purchaser or Seller; as the case may be, as follows: (A) The Escrow Funds together with accrued interest will be released to Seller at the earliest of either: (1) Billable Employees on Purchaser=s payroll generate -net income- in Williams Division at an annual rate which equals or exceeds one million dollars for the one hundred eighty (180) day period beginning with the Closing Date, or (2) Purchaser has been designated the Primary Contractor of Reltec in the Western Region. (B) If either the Primary Contractor designation or the Net Income fails to satisfy the requirements set forth in Section 3.1(a)(i)(A)(1) or (2) above, then the Escrow Funds will be released to the Seller on a prorated basis in accordance with the following formula: 1. Net Income at 12th & 24th months from Closing (Annualized) = Percentage Net ---------------------------------------------------------- Income $1,000,000 Net Income 2. Percentage Net Income X $700,000 = Seller's Initial Escrow Fund Payment 3. The difference between the $700,000 Escrow Fund and the Seller's Initial Escrow Fund Payment will be maintained in escrow. (C) If the Seller's Initial Escrow Fund Payment is less than $700,000 then the Escrow Agent shall maintain the balance of the Escrow Fund for a period of two (2) years from Closing. (D) If the Purchaser reaches and maintains Net Income in Williams Division in an amount which equals or exceeds an annual rate of $1,000,000 for a period of 180 consecutive days commencing at the Closing ending at any time within two (2) years from the date of Closing, then the balance of the Escrow Fund will be paid to Seller by the Escrow Agent. (E) If the Seller cannot meet the requirements of Section 3.1(a)(i) above then the entire balance of the Escrow Fund will be returned to the Purchaser by the Escrow Agent notwithstanding the rate of Net Income earnings at the end of the two year period. (F) Escrow Agent shall be provided a customary save harmless and indemnity clause. (b) In addition to the payments set forth in Sections 3.1(a), above, the Purchaser shall pay the Seller an amount not to exceed $500,000 per year for a period of four (4) years on the first, second, third and fourth anniversary of the Closing Date in accordance with and subject to the following: (i) The annual potential earn-out of $500,000 per year shall be reduced on a dollar for dollar basis for each dollar the Net Income of the Business of the Williams Division for the immediate preceding year is less than $1,000,000. (ii) The Seller shall be entitled to a credit to be used in calculating the availability of a potential earn out in the next succeeding year for all amounts in excess of $1,000,000 in net income generated by the Business in the immediate preceding year. (iii) Shortfalls in any annual Earn Out payment on account of net earnings less than the $1 million can be made up in subsequent years within the four year period to the extent net earnings in such subsequent period exceed $1 million. (c) Seller shall pay sales or other tax, if any, (with the exception of income tax) related to this transaction. 3.2 Purchaser agrees to provide the Seller with accounting statements, in reasonable detail, which will indicate the information necessary to make the calculation referenced in paragraph 3.1 above and 3.3 below. The determination of Net Income and calculation of any pay-out will be made in accordance with GAAP. Said statements will be deemed final and correct unless the Seller shall, within 30 days from the date of delivery of the accounting statements have contested the information therein by giving Seller written notice. If the Seller does not contest the accounting statements within the 30 day period, the statements will be deemed correct and Seller shall waive all right to contest the statements. Any notice hereunder must specify the disagreement in reasonable detail. 3.3 With respect to the collection of accounts receivables due and owing to the Seller at the time of Closing ("Receivables"); Seller shall bill and collect its own receivables, provided such is done in a commercially reasonable manner and provided further that suit will not be filed against any creditor without prior written permission of Purchaser - which shall not be unreasonably withheld. To the extent funds cannot be related to pre or post closing work, the party receiving same shall hold the funds in a separate account until the invoice is agreed upon. 3.4 (a) The sum of $100,000 shall be immediately wire transferred to the trust account of James F. McCollum, P.A. - to be held in escrow pending the closing hereof. James F. McCollum, P.A., as escrow agent is authorized to deposit said funds and hold same in escrow, subject to clearance and to disburse said funds in accordance with the terms and conditions of the Contract. Failure of Purchaser to cause said funds to be transferred within twenty-four hours of the execution hereof and transmittal back by facsimile shall not excuse Purchaser=s performance and shall, at the option of Seller, render this Contract voidable. If in doubt as to agent=s duties of liabilities under the provisions of this Contract, agent may at agent=s option, continue to hold said funds in escrow until the parties mutually agree to its disbursement or until a judgment of a court of competent jurisdiction shall determine the rights of the parties or agent may deposit same with the clerk of the Circuit Court having jurisdiction of the dispute. Upon notifying all parties concerned of such action, all liability on the part of agent shall fully terminate except to the extent of accounting for any items previously delivered out of escrow. The parties acknowledge and agree that the Escrow Agent has acted and will continue to act as counsel to the Seller, including, without limitation, in connection with any dispute arising hereunder. The Escrow Agent shall not be taken or omitted hereunder except for its gross negligence, bad faith, or willful misconduct. Any suit between Purchaser and Seller wherein Escrow Agent is made a party because of acting as agent hereunder or in any suit wherein agent interpleades the subject matter of the Escrow Funds or equivalent and charged and awarded as court costs in favor of the prevailing party. The parties agree that Escrow Agent shall not be liable to any party or person for misdelivery to Purchaser or Seller of items subject to this escrow unless such misdelivery is due to willful breach of the Contract or gross negligence, bad faith or willful misconduct of the Escrow Agent. (b) Provided that the Seller is ready, willing and able to close this transaction in all respect at the time of Closing, if Purchaser is unable to close this transaction in accordance with the provisions of Section 5.1 below, then the deposit paid by Purchaser may be retained by or for the account of Seller as agreed upon liquidated damages, consideration for the execution of this Contract and the full settlement of any claims, whereupon Purchaser and Seller shall be relieved of all obligations under the Contract; or Seller, at Seller=s option, may proceed in equity to enforce Seller=s rights under this Contract. If Seller fails, neglects, or refuses to perform this Contract, the Purchaser may seek specific performance or elect to receive the return of Purchaser=s deposit, without thereby waiving any action for damages resulting from Seller=s reach. ARTICLE IV ASSUMPTION OF LIABILITIES BY PURCHASER 4.1 Anything hereinabove contained to the contrary notwithstanding, Purchaser shall not assume any liabilities of Seller with the exception of the Customer agreements (Exhibit C) and employee contracts (Exhibit D) Purchaser in its sole discretion agrees in writing to assume. ARTICLE V CLOSING AND CLOSING DATE 5.1 It is the Purchaser=s intention to close this transaction by March 1, 1996 and it will make diligent efforts to do so. However, closing of the transaction contemplated by this Agreement (the -Closing-) shall take place no later than March 29, 1996 (-Closing Date-) at the offices of Seller or Seller=s attorney, James F. McCollum, P.A., 129 South Commerce Avenue, Sebring, Florida or such other time and place as may be mutually approved by the parties. All adjustments shall be made as of 12:01 a.m. of the Sunday of the payroll week of Closing. The parties shall adjust all expenses on a pro rata basis as of the date operations are assumed by the Purchaser. 5.2 At the Closing, the Seller shall deliver to the Purchaser the following: (a) Assignments of the contracts listed in Schedule C hereto executed and approved by an authorized representative of Seller's client, in a form satisfactory to Purchaser. (b) A Bill of Sale conveying title to the tangible personal property listed in Schedule B, in the form annexed hereto as Exhibit E. (c) A certified copy of resolutions adopted unanimously by the Seller's Board of Directors authorizing the execution, delivery and performance by the Seller of this Agreement and the consummation of the sale contemplated hereby, or, at Purchaser's option, a written consent executed by all of the stockholders of the Seller authorizing and consenting to the sale herein. (d) Verification in a form satisfactory to Purchaser that Seller has, at the time of Closing, not less than 60 Billable Employees suitable for Purchaser's Business; and (e) The Seller will from time to time at the Purchaser's request, whether prior to, at, or after the Closing, and without further consideration, execute and deliver such further instruments and conveyances and transfers, and take such other action as the Purchaser may reasonably require to more effectively convey and transfer to the Purchaser any of the assets being sold hereunder. (f) Employment agreement between Anderson and Purchaser executed by them in substantially the same form as annexed hereto as Exhibit D. (g) Sole Stockholders certification in the form annexed as Exhibit "D". 5.3 Immediately upon the Closing Date, Seller and its Stockholder will cease and refrain from using the name "Williams Communications Services, Inc." or any similar name or derivation thereof except in the context of "...formerly known as Williams Communication Services, Inc." in order to collect receivables or make government filings. 5.4 As soon as practicable after the Purchaser's request, provided that the request is made after Closing, the Seller will change the name of the entity now known as "Williams Communications Services, Inc.". 5.5 Each party shall have the absolute right in its sole discretion to waive any Closing requirement at or before Closing. If a party does not waive its rights in whole or in part and the other party is not ready, willing and able to perform as of Closing, the non-waiving party shall have the right to terminate this Agreement upon written notice. In the event of such termination, all of the non-waiving party's obligations shall terminate without further loss, damage, cost, claim, right or remedy in favor of the other party 5.6 Seller hereby agrees promptly to pay all employee wages and payroll charges, trade and other accounts payable upon which it is obligated at Closing. If Seller does not pay such non-assumed liability accounts payable on the later of the due date thereof or the tenth (10th) day following notice from Purchaser to pay such accounts or give Purchaser notice that it has a dispute as to the amount due, then Purchaser may pay or assume such accounts payable, and thereafter, such amounts shall be reimbursed by Seller to Purchaser, or, at the Purchaser's option, may be applied against any monies due Seller. 5.7 Seller also agrees (i) to cure any non-waived breaches or defaults that may exist on the Closing Date, with respect to any of the contracts or agreements assumed by Purchaser hereunder, and (ii) to make all payments due or to become due thereunder attributable to periods ending on or before the Closing Date. In the event Seller fails to cure any such breach or default or make any such payment when requested to do so by Purchaser, Purchaser will have the right to cure any such breach or default or make any such payment on or after the tenth (10th) day following Purchaser's request that Seller do so. Any amounts so paid by Purchaser to cure any such breach or default shall be reimbursed by Seller or Stockholder to Purchaser, or at Purchaser's option, may be applied against any moneys due Seller or Stockholder under the right of offset granted in Paragraph 10.2. 5.8 Commencing with the execution of this Agreement and to the extent not previously delivered at or before Closing Purchaser and Seller agree to commence the preparation of and make diligent application for, to follow up on, and to actively and diligently pursue all approvals and consents reasonably requested by Purchaser including but not limited to the consents for approval of assignment of customer and billable employee contracts in a form reasonably acceptable to Purchaser. If all such consents, and approvals are not available at Closing the Stockholder agrees to diligently pursue obtaining such approvals and consents after the Closing at Purchaser's request, at Stockholder's sole cost and expense. ARTICLE VI SELLER'S AND STOCKHOLDER'S REPRESENTATIONS AND WARRANTIES In order to induce Purchaser to execute and perform this Agreement, Seller and Stockholder do hereby represent, warrant, covenant and agree (which representations, survival warranties, covenants and agreements shall be and be deemed to be continuing and survive the execution and delivery of this Agreement and the Closing Date) as follows: 6.1 The Seller is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation, with full power and authority, corporate and otherwise, and with all licenses, permits, certifications, registrations, approvals, consents and franchises necessary to own or lease and operate its properties and to conduct its business as presently being conducted. The Seller is duly qualified to do business as a foreign corporation, and is in good standing, in all jurisdictions, if any, wherein such qualification is necessary. 6.2 Seller owns and has good and marketable title in and to the Property and assets to be sold or transferred hereunder free and clear of all liens, claims and encumbrances and rights and option of others (except as herein expressly provided to the contrary). 6.3 Anderson is the sole stockholder of the Seller and at the Closing there shall not be authorized and/or issued and outstanding any shares of capital stock of the Seller and/or rights to purchase shares of capital stock of the Seller except those issued to Anderson. The issued and outstanding shares of the Seller have been duly authorized and validly issued, and all such outstanding shares are fully paid and non assessable. There are not now nor will there be at the Closing any outstanding options, warrants and similar rights to purchase shares of the Seller's capital stock. There are no preemptive rights. During the period from the date hereof through the Closing, there will be no shares of the capital stock of the Seller issued. Except as herein provided, no dividends or other distributions of the assets of the Seller have or will be declared and/or paid prior to the Closing on or with respect to the capital stock of the Seller. 6.4 (i) Seller has the full power and authority, corporate and otherwise, to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby; (ii) the execution, delivery and performance of this Agreement, the consummation by Seller of the transactions herein contemplated and the compliance by Seller with the terms of this Agreement have been duly authorized by all necessary corporate action, and this Agreement has been duly and properly authorized, executed and delivered by Seller and Stockholder; (iii) this Agreement is the valid and binding obligation of Seller and Stockholder, enforceable in accordance with its terms, subject, as to enforcement of remedies, to applicable bankruptcy, insolvency, reorganization, moratorium and other laws affecting the rights of creditors generally and the discretion of courts in granting equitable remedies; (iv) the execution, delivery and performance of this Agreement by Seller and Stockholder and the consummation by Seller and Stockholder of the transactions herein contemplated does not, and will not, with or without the giving of notice or the lapse of time, or both, (A) result in any violation of the Certificate of Incorporation or By-laws of Seller, (B) result in a breach of or conflict with any of the terms or provisions of, or constitute a default under, or result in the modification or termination of, or result in the creation or imposition of any lien, security interest, charge or encumbrance upon any of the properties or assets of Seller and/or pursuant to, any indenture, mortgage, note, contract, commitment or other agreement or instrument to which Seller is a party or by which it or any of its properties or assets are or may be bound or affected; (C) violate any existing applicable law, rule, regulation, judgment, order or decree of any governmental agency or court, domestic or foreign, having jurisdiction over Seller or any of its properties or businesses; or (D) have any effect on any agreement, permit, certification, registration, approval, consent, license or franchise necessary for Seller to own or lease and operate any of its properties and to conduct its businesses or the ability of Seller to make use thereof. No consent, approval, authorization or order of any court, Customer, governmental agency, authority or body and/or any party to an agreement to which Seller is a party and/or by which it is bound, is required in connection with the execution, delivery and performance of this Agreement, and/or the consummation by Seller of the transactions contemplated by this Agreement except as noted on Schedule H". 6.5 The Seller is not in violation of, or in default under, (i) any term or provision of its Certificate of Incorporation or By-Laws; (ii) any material term or provision or any financial covenant of any indenture, mortgage, contract, commitment or other agreement or instrument to which it is a party or by which it or any of its properties or business is or may be bound or affected; or (iii) any existing applicable law, rule, regulation, judgment, order or decree of any governmental agency or court, domestic or foreign, having jurisdiction over it or any of its properties or business. Seller owns, possesses or has obtained all governmental and other licenses, permits, certifications, registrations, approvals or consents and other authorizations necessary to own or lease, as the case may be, and to operate its properties and to conduct its business or operations as presently conducted and all such governmental and other licenses, permits, certifications, registrations, approvals, consents and other authorizations are outstanding and in good standing, and there are no proceedings pending or, to the best of its knowledge, threatened, or any basis therefore existing, seeking to cancel, terminate or limit such licenses, permits, certifications, registrations, approvals or consents or authorizations. 6.6 Prior to the date hereof Seller has delivered to Purchaser the compiled financial statement of the Seller described on Exhibit "I" annexed hereto and made a part hereof ("Financial Statements"); copies of which have been initialed by the parties hereto for identification. The Financial Statements fairly present the financial position of the Seller as of the respective dates thereof and the results of operations, and changes in financial position of the Seller, for each of the periods covered thereby and are true and accurate. The Financial Statements have been prepared in conformity with generally accepted accounting principles, applied on a consistent basis throughout the entire periods involved. As of the date of any balance sheet forming a part of the Financial Statements, and except as and to the extent reflected or reserved against therein, the Seller did not have any material liabilities, debts, obligations or claims (absolute or contingent) asserted against it and/or which should have been reflected in a balance sheet or the notes thereto; and all assets reflected thereon are properly reported and present fairly the value of the assets therein stated in accordance with generally accepted accounting principles. 6.7 The financial and other books and records of the Seller (including those forming a part of the Property) (i) are in all material respects true, complete and correct and have, at all times, been maintained in accordance with good business and accounting practices; (ii) contain a complete and accurate description, and specify the location, of all trucks, automobiles, machinery, equipment, furniture, supplies, tools, drawings and all other tangible personal property (collectively the "Personal Property") owned by, in the possession of, or used by the Seller in connection with the operation of the Business in the normal course of business; (iii) except as set forth on Exhibit "J" annexed hereto and made a part hereof, none of such Personal Property is leased or subject to a security agreement, conditional sales contract or other title retention or security agreement or is other than in the possession of and under the control of the Seller, (iv) the Personal Property reflected in such books and records constitutes all of the tangible personal property necessary for the conduct by the Seller of the Business as now conducted; and all of the same is in normal operating condition and the use thereof as presently employed conforms to all applicable laws and regulations. 6.8 Annexed hereto and labeled Exhibit "A" is a schedule setting forth a description of each parcel of improved or unimproved real property owned by or leased to the Seller. Exhibit "A" is true correct and complete in all respect; each of such leases are in full force and effect with no event of default in existence or event or occurrence which, with the passage of time and/or giving of notice would or could mature into an event of default thereunder. 6.9 The Seller owns all rights to utilize the General Intangibles free and clear of all liens, claims and encumbrances and rights and options of third parties (including without limitation former or present officers, directors, stockholders, employees and agent, but excluding the rights of licensors); the Seller has not licensed or leased any of the General Intangibles and/or any interest therein to any person and/or entity; the Seller has not infringed, nor is infringing, upon the rights of others with respect to the General Intangibles; and the Seller has not received any notice of conflict with the asserted rights of others with respect to the General Intangibles and the Seller knows of no basis therefore; and to the best of the knowledge, of the Seller, no others have infringed upon the General Intangibles. 6.10 The Customer Materials, Resumes and Records represent all of such materials at any time utilized in connection with, arising out of or relating to the Business; and none of Seller nor any employee, officer, director or stockholder of Seller has or shall retain copies thereof and have not prior to the date hereof, and shall not prior to the Closing, provide to any person or entity or authorize or permit another to make, receive or utilize any of such Customer Materials, Resumes or Records and/or the information therein or thereon reflected, except as permitted in Article VIII. 6.11 The Seller did not have any material liabilities, debts, obligations or claims asserted against it, whether accrued, absolute, contingent or otherwise, and whether due or to become due, including, but not limited to, liabilities on account of due and unpaid taxes, other governmental charges or lawsuits except as listed on Exhibit "K". 6.12 Since the date of the most recent balance sheet included in the Financial Statement, there has been no material adverse change to the business of the Seller nor its prospects and the Seller has not, except as set forth on Exhibit "L" annexed hereto and made a part hereof, (i) incurred any obligation or liability (absolute or contingent, secured or unsecured) except obligations and liabilities incurred in the ordinary course of the operation or business of its business as carried on at and prior to such date; (ii) canceled, without payment in full, any notes, loans or other obligations receivable or other debts or claims held by it other than in the ordinary course of business; (iii) sold, assigned, transferred, abandoned, mortgaged, pledged or subjected to lien any contract, permit, license, franchise or other agreement other than sales or other dispositions of goods or services in the ordinary course of business at customary prices; (iv) increased compensation payable to any of its officers, directors or other employees including in the term "compensation", salaries, fringe benefits, pensions, profit participation and payment of benefits of any kind whatsoever); (v) entered into any line of business other than that conducted by it on such date or entered into any transaction in the ordinary course of its business; (vi) conducted any line of business in any manner except by transactions customary in the operation of its business as conducted on such date; (vii) declared, made or paid, or set aside for payment, any cash or non-cash dividends or other distribution on any shares of its capital stock; (viii) changed or modified any accounting practice; (ix) waived any rights; (x) made any capital expenditure; (xi) pay any amounts to shareholders except the usual salary and benefits; (xii) entered into any agreement too take any of the actions above referenced. 6.13 Seller has not incurred any liability for any finders fees or similar payments in connection with the transactions herein contemplated except as set forth herein. 6.14 Except as set forth on Exhibit "M" annexed hereto and made a part hereof, the Seller is not in default under the terms of any outstanding agreement which is material to the business, operations, properties, assets or condition of the Company; and there exists no event of default or event which, with notice and/or the passage of time, or both, would constitute any such default. 6.15 Except as set forth on Exhibit "N" annexed hereto and made a part hereof, there are no claims, actions, suits, proceedings, arbitrations, investigations or inquiries against the Seller before any court or governmental agency, court or tribunal, domestic, or foreign, or before any private arbitration tribunal, pending, or, to the best of the knowledge of Seller, threatened against the Seller or involving its properties or businesses; nor, to the best of the knowledge of Seller, is there any basis for any such claim, action, suit, proceeding, arbitration, investigation or inquiry to be made by any person and/or entity, including without limitation any customer, supplier, lender, stockholder, former or current employee, agent or landlord. There are no outstanding orders, judgments or decrees or any court, governmental agency or other tribunal specifically naming the Seller and/or enjoining the Seller from taking, or requiring the Seller to take, any action, and/or by which the Seller, and/or its properties or businesses are bound or subject. 6.16 The Seller has filed all federal tax returns (whether relating to income, sales, franchise, withholding, real or personal property, employment or otherwise) required to be filed under the laws of the United States and Florida, and has been paid in full all taxes which are due pursuant such returns or claimed to be due by any taxing authority or otherwise due and owing. No penalties or other charges are or will become due with respect to the late filing of any such return. To the best of the knowledge of Seller, after due investigation, each such tax return heretofore filed by the Seller correctly and accurately reflects the amount of its tax liability thereunder. The Seller has withheld, collected and paid all other levies, assessments, license fees and taxes to the extent required and, with respect to payments, to the extent that the same have become due and payable. Seller may owe taxes in other states and shall indemnify Comforce for any liability it may incur therefore. 6.17 Since the date of the most recent balance sheet included in the Financial Statements, the Seller has not sustained any material loss or interference with its business of any kind nature or description including without limitation, from fire, storm, explosion, flood or other casualty, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree; nor have there been, and prior to the Closing, there will not be, any material adverse change in or affecting the general affairs, management, financial condition, stockholders_ equity, results of operations or properties of the Seller. 6.18 No labor problems exist with the employees of the Seller or are imminent, which would adversely affect the Seller. 6.19 Neither the Seller nor its present or former officers, directors, employees or agents (including any third party acting on behalf of the Seller) have: (i) directly or indirectly, made or authorized to be made, any bribes, kickbacks or other payments of a similar nature, whether lawful or not, to any person or entity, public or private, regardless of the form thereof, whether in money, property or services, to obtain favorable treatment in securing business or to obtain special concessions or to pay for favorable treatment for business secured or for special concessions already obtained; (ii) paid funds or property of any kind was donated, loaned or made available, directly or indirectly, for the benefit of, or for the purpose of opposing, any government or subdivision thereof, either domestic or foreign; (iii) the Seller has not made any loans, donations, or other disbursements, directly or indirectly, to officers or employees of the Seller, for contributions made, or to be made, directly or indirectly, for the benefit of, or for the purpose of opposing, any government or subdivision thereof, either domestic or foreign; and (iv) the Seller has not and does not maintain a bank account or other account of any kind, whether domestic or foreign, which account was not reflected in the corporate books. 6.20 The corporate record books of the Seller have been duly and properly maintained, are in good order, complete, accurate, up to date and with all necessary signatures, and set forth all meetings and actions heretofore held and/or taken by the stockholders and/or directors of the Seller, as the case may be, and/or as set forth in all certificates of votes of stockholders or directors hereto fore furnished to anyone at any time. 6.21 The copies of the Certificate of Incorporation (and all amendments thereto) and the By-Laws of the Seller heretofore delivered by the Seller and initialed by the parties hereto for identification, are true, correct and complete in all respects; are, and shall remain, in full force and effect; and shall not be altered, amended, modified, terminated or rescinded prior to the Closing without the prior written consent of the Purchaser in each instance. 6.22 The officers and members of the Board of Directors of the Seller are as set forth on Exhibit "O" annexed hereto and made a part hereof; and during the period from the date hereof until the Closing, there shall be no change in such officerships and/or memberships without the prior written consent of the Purchaser in each instance. 6.23 Except as set forth on Exhibit"P" annexed hereto and made a part hereof, no officer or director of the Seller or the Seller (and/or any member of their respective immediate families) has a financial interest (direct or indirect) in any competitor, supplier or customer of the Seller. 6.24 Each of the agreements and purchase orders described on Exhibit "Q" annexed hereto and made a part hereof are in full force and effect, have not been altered, amended, modified, terminated or rescinded, are fully enforceable in accordance with their respective terms. 6.25 Other than as set forth on Exhibit "R" annexed hereto and made a part hereof, the Seller is not a party (i) to any contract or agreement calling for the payment of more than $10,000 per annum or $25,000 in the aggregate and/or which cannot be terminated on no more than 90 days prior written notice from the Seller to the other party thereto; (ii) to any profit sharing, bonus, deferred compensation, pension or retirement plan, severance policy or other similar agreement or arrangement; (iii) to any collective bargaining agreement; or (iv) to any agreement not entered into in the ordinary course of business. 6.26 Seller represents that the Customer contracts of the Company are effective and there exists no breach or default with respect to same. That the copies of those contracts previously delivered to Purchaser are accurate and complete and there exist no amendments or set of facts with respect to same which were not previously disclosed. Seller knows of no present condition or set of facts that the requirements or pricing for personnel in such contracts shall materially be reduced or changed adversely. That Seller is not presently aware of any past deficiencies in its performance of services under such contracts that might adversely affect the continuation of supplying services under such contracts. 6.27 There have been no past proceedings or are there any proceedings now pending nor, to Seller's knowledge or belief, threatened against Company before the National Labor Relations Board, State Department of Labor, State Commission on Human Rights and Opportunities, State Department of Labor, Equal Employment Opportunity Commission or any other local, state or Federal agencies having jurisdiction over employee rights with respect to hiring, tenure, conditions of employment within the three year period prior to the execution of this Agreement. 6.28 Seller, to its best knowledge and belief, represents that Seller has made, reported and remitted all appropriate Federal, State and local payroll related deductions and taxes to Florida and state of employee residence including: FICA, FUTA, SUI and income tax withholdings presently due and owing; all Florida and state of employee residence Sales and Use Taxes; and further warrants that it will report and remit all withholdings and taxes due for activities prior to the Closing Date. 6.29 That none of the contracts referenced or listed on Exhibit "Q" were obtained or executed based in whole or in part on the fact or representation that Seller is a minority or woman owned or operated business or a small business enterprise as those or similar terms are defined by Federal or state statutes or regulations. 6.30 The Seller has not been the subject of any union organizing activity and there have been no attempts to unionize the employees of Seller. 6.31 Seller has paid all employees whether staff or Billable Employees in accordance with applicable state and federal law. All non exempt employees have been paid appropriate and correct premium wages where applicable. There have been no past or present exempt employees on the payroll of Seller; no payment for the lease and/or rental of vehicles or equipment; and no payment or reimbursement to employees for moving, meals, incidental or lodging expenses (commonly known as per diem payments) and no payments to Billable Employees as consultants or independent contractors with the exception of those listed on Exhibit "S" annexed hereto and made a part hereof. 6.32 Seller has not retained the services of any independent contractor or consultant for assignment to Customers except as listed on Exhibit "T" annexed hereto and made a part hereof. 6.33 There are no contracts, agreements, or arrangements, written or oral, relating to the conduct of the business of the Seller to be sold hereunder to which Seller is a party or is bound, except as may be referred to in this Agreement, or any schedule or exhibit annexed hereto. 6.34 Exhibit "U" contains complete, correct and current copies of all insurance policies in effect as of the time of this agreement. Seller represents that the coverage provided is valid and adequate to fully cover against all suits, claims, obligations, damages and liabilities arising from the conduct of the business or the property utilized therein, including damage to property or personal injury. Seller shall keep such coverage in effect through the date of Closing. 6.35 The representations, warranties, covenants and agreement of the Seller and Stockholder contained in this Agreement, including, without limitation, those contained in this Paragraph 6.35, are true, complete, accurate and correct in all respects as of the date hereof and shall be true, accurate and correct and complete, in all respects as of the Closing; and will not contain any untrue statement of any material fact, or omit to state a material fact in order to make any or all of such representations and warranties not materially misleading as of this date and as of the Closing Date; and at the Closing the Seller shall deliver to the Purchaser a certificate, executed by Anderson remaking each of the Seller's representations, warranties, covenants and agreement set forth in this Agreement, including without limitation, those set forth in this Paragraph 6.35. ARTICLE VII PURCHASER'S REPRESENTATIONS AND WARRANTIES The Purchaser represents and warrants to the Seller as follows: 7.1 The Purchaser is a corporation duly organized, validly existing and in good standing under and by virtue of the laws of the State of Delaware, and the execution and delivery of this Agreement and the purchase contemplated hereby have been duly authorized by all necessary corporate action on the part of the Purchaser. 7.2 The Purchaser has corporate power to execute and perform this Agreement, and to consummate the transactions contemplated hereby. 7.3 The execution and performance of this Agreement by Purchaser will not conflict with, or result in a breach of, any of the terms, conditions, or provisions of any law or any regulations, order, writ, injunction, or decree of any court or governmental instrumentality, or of the corporate charter or by-laws of the Purchaser or of any agreement, whether written or oral, or other instrument to which it is a party or by which it is bound, or constitute (with the giving of notice or the passage of time, or both) a default thereunder. ARTICLE VIII ACCESS AND INFORMATION 8.1 From and after the Closing Date, and for a period of seven (7) years thereafter, the Seller shall give to the Purchaser, and the Purchaser shall maintain the same intact in the State of Florida and shall not remove or destroy the same without the written consent of the Seller, all operating books and financial records (other than corporate records) relating to the business to be sold hereunder (including paid supplier invoices, customers' billings and payroll records and returns). Seller need not, however, give to or leave in Purchaser's possession any of the following, unless they are found to be necessary for the continued operation of the business to be sold hereunder: Seller's corporate, financial and accounting books, records, journals, the general ledger and all other journals and ledgers which constitute books of original entry, bank statements, canceled checks and internal financial statements. From and after the Closing Date, the Purchaser shall give to the Seller and its representatives from time to time upon request of the Seller full access during normal working hours to any and all books, contracts and other records (including credit files) of the Seller left in the possession of the Purchaser, including the right to make copies thereof. This right to access may be unilaterally extended by Purchaser by written notice to accommodate any audit, investigation, lawsuit or similar need, whether perceived or real by Seller. 8.2 From and after the Closing Date, and for a period of seven (7) years, the Seller shall give to the Purchaser and its representatives from time to time within the State of Florida upon request of the Purchaser full access during normal working hours to all books, contracts and other records, including credit files, which are not to be conveyed to the Purchaser hereunder and which are relevant to the present business which have been retained in the Seller's possession, including the right to make copies of relevant portions thereof. The Seller shall be obligated to give reasonable notice of not less than thirty (30) days in writing to the Purchaser of the Seller's intention to dispose of or destroy any such books, contracts or other records related to the business and shall, at the Purchaser's request, turn over to the Purchaser any of the books contracts, or other records set forth in any such notice to the extent that they relate to the business. ARTICLE IX INDEMNIFICATION 9.1 The Seller and the Stockholder individually agree to indemnify and hold the Purchaser harmless against all losses, liabilities, deficiency, damage or expense, including reasonable counsel fees, resulting from: the assertion of claims and made against the assets sold hereunder by creditors of the Seller, whether such creditors be disclosed or undisclosed by Seller to Purchaser and whether or not related to any states Bulk Sales law. ARTICLE X INDEMNIFICATION AND OFF SET 10.1 In addition to the indemnifications set forth in other sections hereof and subject to the limitations hereinafter described, the Seller and Stockholder agree, jointly and severally, to indemnify, exonerate, defend and save the Purchaser its Affiliates, officers, directors, employees and representatives (collectively the "Purchaser" for the purposes of this Section 10) harmless from, against, for and in respect of the full amounts of any and all damages, losses, demands, obligations, tax, interest, penalty, suit, judgment, order, lien, liabilities, debts, claims, actions, causes of action, encumbrances, costs and expenses, whether administrative, judicial or otherwise, of every kind and nature, including, without limitation, reasonable attorneys', consultants', accountants' and expert witness fees, suffered, sustained, incurred or required to be paid at any time after the Closing by the Purchaser based upon, arising out of, resulting from or because of: (a) any obligations of the Seller or Stockholder incurred in connection with the making and performance of this Agreement; (b) any claim, demand or cause of action asserted against the Purchaser with respect to any claims, obligations or liabilities whatsoever, whether disclosed or undisclosed, absolute or contingent, direct or indirect due or to become due, now existing or arising hereafter, for debts, liabilities, contractual obligations, violations, torts, events or incidents existing, incurred, accrued or occurring prior to Closing; (c) the untruth, inaccuracy, incompleteness, violation or breach of any representation, warranty, agreement, undertaking or covenant of Sellers contained in or made pursuant to this Agreement or any acts or circumstances constituting untruth, inaccuracy, violation or breach; (d) any claims made against or expense incurred by Purchaser including, but not limited to, those with respect to the conditions or operations of the Seller made by regulatory or administrative agencies having jurisdiction over the Seller resulting from violations of local, state or federal laws or regulations by Seller or any of their respective agents, servants or employees, or resulting form a failure to collect or remit state or local taxes, arising prior to the Closing; (e) all reasonable costs and expenses (including, without limitation, reasonable attorneys' fees, interest, and penalties) incurred by the Purchaser in connection with any action, suit, proceeding, demand, assessment or judgment incident to any of the matters indemnified against. 10.2 Seller and Stockholder being the holder of all of the issued and outstanding shares of Seller, individually hereby grants to Purchaser the right of full offset against any monies due Seller or Stockholder, either under this Agreement or any other agreement the Stockholder may have with Purchaser, or Purchaser's Affiliates, including employment agreements, for the purpose of applying same to any sums that might become due to Purchaser as a result of the indemnities herein made or as a result of a breach of any of the covenants, representations or warranties herein contained. Said right of offset shall in no way limit Purchaser's ability to collect any funds due and owing to it from the Seller or the Stockholder. ARTICLE XI EFFECTIVE DATES OF TRANSACTIONS 11.1 The effective date of the purchase and sale contemplated herein shall be to the date of execution with adjustments to be made immediately after midnight on the Sunday of the payroll week of Closing. 11.2 In amplification of the above stated general understanding of the parties, the following provisions will govern specific aspects of the change in ownership: (a) Seller will remain liable for all of its accounts payable for items actually delivered or services actually rendered, all payroll obligations including the deduction and payment to the appropriate Federal state and local authorities for income tax withholdings, FICA, FUTA, SUI and all other payroll deductions, and Sales and Use taxes accrued or incurred on or before the effective date. (b) The Purchaser shall pay for all supplies and equipment actually delivered or services actually rendered after the effective date, provided, however, that such supplies and equipment or such services were purchased or rendered in the ordinary course of the business and are necessary for the continuation of the business. (c) The Purchaser shall be obligated to perform all contracts and purchase orders with clients with respect to items not performed prior to effective date, provided that such contracts and purchase orders were entered into by Seller in the ordinary course of business, disclosed to Purchaser prior to Closing, and further provided that such obligations arise from services rendered on or after the date of Closing. (d) All expenses paid or obligations incurred by Seller, if any, as a result of which Purchaser will receive after effective date the benefit of a portion of the consideration for such expenses shall be prorated between the parties in an equitable manner reflecting the relative benefit received by each. All expenses paid or obligations incurred by Purchaser (other than Payables) as a result of which Seller has received on or before effective date the benefit of a portion of the consideration for such expenses shall be prorated between the parties in an equitable manner reflecting the relative benefit received by each. All of such prorations shall be made in accordance with normal business practice. (e) All obligations of the Seller for commissions payable to commission sales agents which relate to work done on or before effective date shall remain the obligation of the Seller. Purchaser shall be responsible for all sales commissions for work done after the effective date. (f) All inquiries and communications received by the Seller after the effective date will be forthwith mailed to the Purchaser to the extent the same relate to the business sold by the Seller hereunder. ARTICLE XII COVENANTS AND AGREEMENT BY SELLER From the date hereof until the Closing Date, Seller covenants and agrees that: 12.1 Conduct of Business. (a) Seller shall operate the Business in the usual and ordinary course; (b) Seller shall not remove or transfer from the Company any assets for less than full and fair consideration, including but not limited to, the payment of cash dividends; (c) Permit the officers and other authorized representatives of Purchaser (i) full and unrestricted access, from time to time and at one or more times, to the plants, properties, offices and books and records of the Seller, during normal business hours, and in connection with such books and records, such inspection shall be at the offices where such records are normally maintained, and such parties shall be entitled to make copies of and abstracts from any of such books and records; (ii) the opportunity to meet, correspond and communicate with the officers, directors, employees, counsel and accountants to the Seller, and to secure from each such information as such parties shall deem necessary or appropriate; and (iii) to review and copy such other, further and additional financial and operating date, materials and information as to the business and operations of the Seller as may be requested by such parties; provided however that all such information and material secured by such parties in the course of such investigation shall be and be deemed to be confidential and shall be used solely in connection with the transactions herein described, and all written memoranda and documents and/or other tangible evidence of such information shall either be returned to the Seller and/or destroyed in the event the subject acquisition is not consummated. (d) Maintain all insurance coverages in full force and effect. (e) Retain the Business' current employees so that they will remain employable after Closing. (f) Take and perform any and all actions necessary to render accurate and/or maintain the accuracy of, all of the representations and warranties of the Seller and Stockholder herein contained and/or satisfy each covenant or condition required to be performed or satisfied by the Seller and Stockholder at or prior to the Closing and/or to cause or permit the implementation of the within acquisition. (g) Not take or perform any action which would or might cause any representation or warranty made by the Seller and Stockholder herein to be rendered inaccurate, in whole or in part and/or which would prevent, inhibit or preclude the satisfaction, in whole or in part of any covenant required to be performed or satisfied by the Seller and Stockholder at or prior to the Closing and/or the implementation of the within acquisition. (h) Cause the Seller to perform, in all material respects all of the Company's obligations under all material agreements, leases and documents relating to or affecting the Property and Business; and use its best efforts to preserve, intact, the relationships with the Company's suppliers, customers, employees and other having business relations with the Company so that the Business will be intact at Closing. (i) Immediately advise Purchaser of any event, condition or occurrence which constitutes or may, with the passage of time and/or giving of notice constitute, a breach of any representation or warranty of the Seller or Stockholder herein contained and/or which prevents, inhibits or limits or may prevent, inhibit or limit Seller or Stockholder from satisfying, in full and on a timely basis, any covenant, term or condition herein contained and/or implementing this Agreement. (j) Seller or Stockholder will permit access to Customer representatives and will accompany and introduce Purchaser representatives to the Customers as may be requested, among other things, Seller=s performance, the existence of any defaults prices an prospects for further work. This access will not obviate or release Seller or Stockholder from liability for any representation or warranty made with respect to the Customers or Customer contracts. Other than obligations to preserve confidential information as contained in this Agreement, the Purchaser shall have no liability with respect to or arising out of meeting with the Customers. (k) Neither Seller nor Stockholder will solicit or entertain any offers through principals, agents or brokers to purchase, sell, encumber or otherwise transfer any or all of the stock or assets of Seller, with the exception of the sale of goods or services in the ordinary course of business, unless and until this agreement has been terminated in accordance with its terms. Seller and Stockholder agree to promptly notify Purchaser in the event either of them receive any such inquiry or offer. (l) Not take any action in the singular or aggregate which results, or with the passage of time is likely to result in a material adverse change to the business or the prospects of the business of Seller. ARTICLE XIII COVENANTS AND AGREEMENTS BY PURCHASER 13.1 Anderson and Purchaser shall enter into an employment agreement in accordance with the terms contained in Exhibit "D" hereto. Said agreement shall among other things provide that Anderson will have significant discretion in managing the operations of the Business after the Closing and throughout the contingent payout period. ARTICLE XIV SELLER'S CONDITIONS TO CLOSING The obligation of Seller and Stockholder to consummate the transactions contemplated by this Agreement is, unless waived by Seller, subject to the fulfillment, on or before the Closing, of each of the following conditions: (a) No third party injunction or restraining order shall be in effect which prohibits, restricts or enjoins, and no suit, action or proceeding shall be pending which seeks to prohibit, restrict, enjoin, nullify, seek material damages with respect to or otherwise materially adversely affect the consummation of the transactions contemplated hereby; (b) All covenants of Purchaser under this Agreement to be performed prior to the Closing shall have been performed in all material respects, except to the extent attributable to actions expressly permitted or consented to by Seller in writing; or otherwise waived (c) At the Closing, Seller shall have received a certificate, executed by the President and Secretary of the Purchaser (effective as of the Closing), and in form and content reasonably acceptable to Seller, certifying the truth and accuracy of the representations and warranties of the Purchaser herein contained. (d) Seller shall have received from Purchaser a certificate from the Department of State of the State of Delaware to the effect that Purchaser is in good standing in such state; (e) All material authorizations, approvals or waivers of any federal or state regulatory bodies shall have been obtained; (f) Seller shall have received all certificates, instruments, agreements and other documents to be delivered at or before Closing as provided in this Agreement and a certificate signed by an officer of Purchaser confirming the matters set forth in paragraphs (a), (b), (c) and (e) above; and (g) Purchaser shall tender to Seller the Purchase Price required to be paid at Closing in immediately available funds by check or bank wire to an account or accounts designated by Seller. ARTICLE XV PURCHASER'S CONDITIONS TO CLOSING The obligation of Purchaser to consummate the transactions contemplated by this Agreement is, unless waived by Purchaser, subject to the fulfillment, on or before the Closing, of each of the following conditions: (a) No injunction or restraining order shall be in effect which prohibits, restricts or enjoins, and no suit, action or proceeding shall be pending which seeks to prohibit, restrict, enjoin, nullify, seek material damages with respect to or otherwise materially adversely affect the consummation of the transactions contemplated hereby; (b) All covenants of Seller and Stockholder under this Agreement to be performed prior to the Closing shall have been performed in all material respects, except to the extent attributable to actions expressly permitted or consented to by Purchaser in writing; (c) At the Closing, Purchaser shall have received a certificate, executed by the President and Secretary of the Seller and Stockholder (effective as of the Closing), and in form and content reasonably acceptable to Purchaser, certifying the truth and accuracy of the representations and warranties of the Seller and Stockholder herein contained. (d) Purchaser shall have received from each of Seller a certificate from the Department of State of the State of Florida to the effect that Seller is in good standing in such state; (e) Purchaser has received such documentation as may be necessary to establish that Purchaser is not required to withhold any portion of the Purchase Price pursuant to Section 1445 of the Internal Revenue Code of 1986 (substantially in the form of Exhibit V hereto); (f) Purchaser shall have received all Property, assets, certificates, instruments, agreements and other documents to be delivered by Seller at or before Closing as provided in this Agreement, including a certificate signed by an officer of Seller confirming the matters set forth in paragraphs (a), (b), (c) and (e) above; (g) Prior to the Closing there shall not have occurred any material adverse change in the Business, nor shall any event have occurred or condition exist which, with the passage of time or the giving of notice, may cause or create any such adverse material change. (h) Prior to the Closing, all corporate and other proceedings in connection with the transactions contemplated by this Agreement and all documents and instruments incident to such transactions shall be in form and content reasonably satisfactory to Purchaser and its counsel, and Purchaser and its counsel shall have received all counterpart originals or certified or other copies of such documents and instruments as they may reasonably request. (i) All statutory requirements for the valid consummation by the Seller of the transactions herein described shall have been fully and timely satisfied; all authorizations, consents and approvals of all Federal, state and local governmental agencies and authorities required to be obtained in order to permit consummation by Seller of the transactions herein described, and/or to permit the Business to continue unimpaired in all material respects immediately following the Closing shall have been obtained and shall be in full force and effect; and no action or proceeding to suspend, revoke, cancel, terminate, modify or alter any of such authorizations, consents or approvals shall be pending or threatened. (j) Purchaser shall have received all the documentation including the Bill of Sale and Anderson=s employment agreement required to be delivered to it pursuant the provisions of the Agreement. (k) Purchaser shall have received an opinion of counsel to Seller with respect to those matters set forth on Exhibit "W" hereto. ARTICLE XVI TERMINATION 16.1 Termination. Anything herein or elsewhere to the contrary notwithstanding, this Agreement and any agreement ancillary hereto may be terminated and the transactions contemplated hereby abandoned at any time prior to or at the Closing by: (a) mutual consent of Seller and Purchaser; (b) Seller, if any of the conditions set forth in Article XIV shall not have been met and shall not have been waived by Seller as of the Closing Date, and at such time Seller is not in material breach or default of its obligations contained in this Agreement; or (c) Purchaser, if any of the conditions set forth in Article XV shall not have been met and shall not have been waived by Purchaser as of the Closing Date, and at such time Purchaser is not in material breach or default of any of its obligations contained in this Agreement. Any party desiring to terminate this Agreement pursuant to this Article XVI shall give notice of such termination to the other party hereto in accordance with Section 21.7. 16.2 Effect of Termination. (a) If this Agreement is terminated in accordance with Section 16.1, then all rights and obligations of the parties hereunder shall terminate and be of no further effect; provided, however, that no such termination shall relieve any party of liability for any breach of its obligations under this Agreement prior to such termination. ARTICLE XVII PUBLIC ANNOUNCEMENT Seller and Stockholder recognize and agree that the Purchaser is a public company and that the Seller and the Stockholder will not make any public announcement concerning this Agreement or the negotiations and to keep same confidential unless given written permission from the Purchaser to make any announcement or otherwise disclose the information. Purchaser shall have the right to announce the transaction contemplated hereby and/or the negotiations between the parties upon notice to the Seller and whether or not the announcement is required by law regulation or the rules of any public stock exchange on which Purchaser=s stock is listed. ARTICLE XVIII NEGATIVE COVENANTS 18.1 It is understood by the parties herein that the negative covenants contained in this Section and the one following are a prime and essential consideration on which Purchaser will rely prior to and after the Closing Date in consummating this Agreement. 18.2 Seller and Stockholder agree that in consideration of the sale of its business to Purchaser that for a period of five (5) years after the Closing Date, they jointly and individually will not: (a) directly or indirectly, own, manage, operate, control, be employed by, participate in, render service to, solicit customers for, or be connected with any business which competes with Purchaser, or any of its affiliated corporations with respect to the business of supplying technical personnel and services to others within the States of Florida, California and Ohio. (b) solicit or accept any business from clients or potential clients of Seller that Seller or Stockholder may have contacted or been assigned at any time during the three (3) year period prior to Closing; or (c) approach directly or indirectly any employee (billable or staff) without regard to location for the purpose of attempting to or actually soliciting or hiring that employee from its/his account or the account of another. 18.3 It is recognized by Seller and Stockholder that an action for damages may not be an adequate remedy for Purchaser in the event of the breach of any of the negative covenants contained in this Agreement, and therefore, it is agreed that in addition to any other rights Purchaser may have in the event of a breach of this Agreement, Purchaser shall have the right to judicial enforcement of said covenants by way of injunction, restraining order or any other similar equitable relief. If any portion of the foregoing covenants is invalid or unenforceable due to area or time, such fact shall not affect the validity or enforceability of the remaining portions or prevent enforcement of restrictions to the extent a court of competent jurisdiction may consider reasonable. The parties agree that in any event said restrictions shall be enforced to the maximum extent permitted by law. 18.4 The time period of the negative covenant may be extended for a period of time equal to that time period utilized during the pendency of any action by a court of competent jurisdiction in its discretion. 18.5 Seller will deliver negative covenant agreements in the form annexed as Exhibit "X" for those employees designated by Purchaser at Closing. ARTICLE XIX NO BROKERS 19.1 The parties represent and warrant to the other that there are no claims for brokerage commissions or finders' fees in connection with the transactions contemplated hereby. ARTICLE XX FEES AND EXPENSES 20.1 Except as herein otherwise provided, each of the parties hereto shall pay its own legal and accounting charges and other expenses incident to the execution of this Agreement and the consummation of the transactions contemplated hereby. ARTICLE XXI MISCELLANEOUS 21.1 This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. All covenants and agreements made by or on behalf of any of the parties hereto shall be binding upon and inure to the benefit of their respective successors and assigns, unless otherwise specifically set forth herein. The terms and provisions of this Agreement may not be modified or amended, except in writing signed by all parties hereto. No representations, warranties, or covenants, express or implied, have been made by any party to this Agreement in connection with the subject matter hereof, except as expressly set forth in this Agreement and the exhibits hereto. The headings in this Agreement are for the convenience of reference only and shall not limit or otherwise affect the meaning hereof. 21.2 No terms and provisions hereof, including, without limitation, the terms and provisions contained in this sentence, shall be waived, modified or altered so as to impose any additional obligations or liability or grant any additional right or remedy, and no custom, payment, act, knowledge, extension of time, favor or indulgence, gratuitous or otherwise, or words or silence at any time, shall impose any additional obligation or liability or grant any additional right or remedy or be deemed a waiver or release of any obligation, liability, right or remedy except as set forth in a written instrument properly executed and delivered by the party sought to be charged, expressly stating that it is, and the extent to which it is, intended to be so effective. No assent, express or implied, by either party, or waiver by either party, to or of any breach of any term or provision of this Agreement or of the exhibits or schedules shall be deemed to be an assent or waiver to or of such or any succeeding breach of the same or any other such term or provision. 21.3 The captions of this Agreement are for convenience and reference only, and in no way define, describe, extend or limit the scope or intent of this Agreement or the intent of any provisions hereof. 21.4 Stockholder agrees that it will, and will cause Seller at any time before and after the Closing to execute and deliver all additional documents, and do any other acts or things that may be reasonably requested by Purchaser in order to further perfect Purchaser's rights and interests contemplated hereunder and that they will aid in the prosecution, defense or other litigation with third persons of any rights arising from this Agreement, all without further consideration. 21.5 Jurisdiction. This Agreement shall be governed by the laws of the State of Florida Any judicial proceeding brought against any of the parties to this Agreement on any dispute arising out of this Agreement or any matter related hereto shall be brought in the courts of the State of Florida or in the United States District Court for the Middle District of Florida (or the same Bankruptcy Courts), and, by execution and delivery of this Agreement, each of the parties to this Agreement accepts for itself or himself the process in any action or proceeding by the mailing of copies of such process to such party at its or his address as set forth in Section 21.7, and irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement. Each party hereto irrevocably waives to the fullest extent permitted by law any objection that it or her may nor or hereafter have to the laying of the venue of any judicial proceeding brought in such courts and any claim that any such judicial proceeding has been brought in an inconvenient forum. The foregoing consent to jurisdiction shall not constitute general consent to service of process for any purpose except as provided above and shall not be deemed to confer rights on any person other than the respective parties to this Agreement. EACH PARTY HERETO WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING UNDER THIS AGREEMENT. 21.6 Captions. The Article and Section captions used herein are for reference purposes only, and shall not in any way affect the meaning or interpretation of this Agreement. 21.7 Notices. Unless otherwise provided herein, any notice, request, instruction or other document to be given hereunder by any party to any other party shall be in writing and shall be deemed to have been given (a) upon personal delivery, if delivered by hand, (b) three days after the date of sending such notice by certified mail, return receipt requested, or (c) the next business day if sent by facsimile transmission or by an over night courier service, and in each case of mailing, postage prepaid and at the respective addresses or numbers set forth below: To Seller: Bruce Anderson Route 1, Box 19A Wauchula, FL 33873 with a copy to: James F. McCollum, Esquire 129 South Commerce Avenue Sebring, FL 33870 To Purchaser: COMFORCE Corporation 2001 Marcus Avenue Lake Success, New York 11042 Attn: President with a copy to: Marc D. Freedman, Attorney At Law 70 Hilltop Road Suite 2000 Ramsey, NJ 07446 Attention: Marc D. Freedman, Esq. FAX: 201-825-4505 To Stockholder: Bruce Anderson 612 North Indiana Avenue Englewood, FL 34223 with a copy to: James F. McCollum, Esquire 129 South Commerce Avenue Sebring, FL 33870 21.8 Parties in Interest. This Agreement may not be transferred, assigned, pledged or hypothecated by Seller or Stockholder, other than by operation of law or with the prior written consent of the Purchaser, and any purported transfer, assignment, pledge or hypothecation in violation of this Section shall be void. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective administrators, successors and permitted assigns. Notwithstanding the foregoing the Purchaser may assign its rights and obligations hereunder to any Affiliate or subsidiary company upon notice to Seller. 21.9 Severability. In the event any provision of this Agreement is found to be void and unenforceable by a court of competent jurisdiction or arbitration panel, the remaining provisions of this Agreement shall nevertheless be binding upon the parties with the same effect as though the void or unenforceable part had been severed and deleted. 21.10 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which taken together shall constitute one instrument. 21.11 Entire Agreement. This Agreement, including the other documents referred to herein, contains the entire understanding of the parties hereto with respect to the purchase of the assets under this Agreement and supersedes all prior agreements, correspondence, conversation, negotiations and understandings between the parties with respect to such subject matter. 21.12 Amendments. This Agreement may not be changed orally, but only by an agreement in writing signed by all of the parties hereto, and no waiver of compliance with any provision or condition hereof and no consent provided for herein shall be effective unless evidenced by an instrument in writing duly executed by the party hereto seeking to be charged with such waiver or consent. 21.13 Third Party Beneficiaries. Each party hereto intends that this agreement shall not benefit or create any right or cause of action in or on behalf of any person other than the parties hereto and their respective successors and assigns as permitted under Section 21.8. 21.14 Gender. As used in this Agreement, any gender includes a reference to all other genders and the singular includes a reference to the plural and vice versa. ARTICLE XXII EFFECT OF CLOSING 22.1 The terms of this Agreement shall survive the Closing and shall not become merged therein. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written. WILLIAMS COMMUNICATIONS COMFORCE GLOBAL, INC. SERVICES, INC. By:_________________________ By:________________________________ Michael Ferrentino, President Bruce Anderson, President ---------------------------------- Bruce Anderson, Individually and as Sole Stockholder EXHIBITS AND SCHEDULES Section Description Designation - ------- ----------- ----------- 1(d) and 6.8 Real Property Exhibit A 1.1(f) and 2.1(e) Equipment, Furniture and Fixtures Exhibit B 2.1(a), 4.1 and 5.2 Customer Contracts (3) Exhibit C 3.1(b) Escrow Agreement Schedule II 5.2(b) Bill of Sale Exhibit E 5.2(d)(ii) List of Billable Employees Schedule F 5.2(g) and 13.1 Employment Agreements Exhibit D 5.2(h) Sole Shareholder Certification Exhibit G 6.4 Consents Necessary Schedule H 6.6 Financial Statements Exhibit I 6.7 Leases & Security Interests Exhibit J 6.11 Liabilities Exhibit K 6.12 Liabilities Since Last Financial Statement Exhibit L 6.14 Defaults on Contracts Exhibit M 6.15 Litigation Exhibit N 6.22 Directors and Officers Exhibit O 6.23 Conflicts Exhibit P 6.24 List of Customer Contracts Exhibit Q 6.25 Material Contracts Exhibit R 6.31 Payments to Employees Exhibit S 6.32 Consultants and Independent Contractors Exhibit T 6.34 Insurance Policies Exhibit U 15(e) IRS Section 1445 Certificate Exhibit V 15(k) Purchaser's Attorney's Opinion Letter Exhibit W 18.6 Restrictive Covenant Agreements Exhibit X EX-10 4 REVOLVING CREDIT AGREEMENT EXHIBIT 10.2 $2,250,000 REVOLVING CREDIT AGREEMENT dated as of February 29, 1996 between COMFORCE GLOBAL, INC., as Borrower and THE CHASE MANHATTAN BANK, N.A., as Bank THIS REVOLVING CREDIT AGREEMENT (the "Agreement") dated as of February 29, 1996, between COMFORCE GLOBAL, INC., a corporation organized under the laws of Delaware (the "Borrower") and THE CHASE MANHATTAN BANK, N.A., a national banking association organized under the laws of the United States of America (the "Bank"). The Borrower desires that the Bank extend credit as provided herein, and the Bank is prepared to extend such credit. Accordingly, the Borrower and the Bank agree as follows: ARTICLE 1. DEFINITIONS; ACCOUNTING TERMS. Section 1.01. Definitions. As used in this Agreement the following terms have the following meanings (terms defined in the singular to have a correlative meaning when used in the plural and vice versa): "Acquired Assets" means all assets of Seller acquired by Borrower pursuant to the terms of the Purchase Agreement. "Acquisition" means any transaction pursuant to which the Borrower or any of its Subsidiaries, (a) acquires equity securities (or warrants, options or other rights to acquire such securities) of any corporation or other business entity which is not then a Subsidiary of the Borrower, pursuant to a solicitation of tenders therefor, or in one or more negotiated block, market or other transactions not involving a tender offer, or a combination of any of - 1 - the foregoing, which results in the Borrower having a controlling interest in such corporation or other business entity, or (b) makes any entity not then a Subsidiary of the Borrower a Subsidiary of the Borrower, or causes any such entity to be merged into the Borrower or any of its Subsidiaries, in any case pursuant to a merger, purchase or assets or any reorganization providing for the delivery or issuance to the holders of such entity's then outstanding securities, in exchange for such securities, of cash or securities of the Borrower or any of its Subsidiaries, or a combination thereof, or (c) purchases all or substantially all of the business or assets of any entity. "Affiliate" means with respect to any Person, any Person: (a) that directly or indirectly controls, or is controlled by, or is under common control with, such Person; (b) that directly or indirectly beneficially owns or holds 5% or more of any class of voting stock of such Person; (c) 5% or more of the voting stock of which is directly or indirectly beneficially owned or held by such Person; (d) which is a partnership in which such Person is a general partner, or (e) each of such Person's officers, directors joint venturers and partners. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise. "Agreement" means this Revolving Credit Agreement, as amended or supplemented from time to time. References to Articles, Sections, Exhibits, Schedules and the like refer to the Articles, Sections, Exhibits, Schedules and the like of this Agreement unless otherwise indicated. - 2 - "Amortization" means amortization in accordance with GAAP. "Borrowing Base" means at any time an amount equal to seventy-five percent (75%) of the Borrower's Eligible Receivables. "Borrowing Base Certificate" means a certificate signed by the Chief Executive Officer or the Chief Financial Officer of the Borrower in the form of Exhibit B annexed hereto with such changes as the Banks may require from time to time. "Business Day" means any day on which commercial banks in New York City are not authorized or required to close. "Capital Lease" means any lease which has been capitalized on the balance sheet of the lessee in accordance with GAAP. "Closing Date" means the date this Agreement has been executed by the Borrower and the Bank. "Code" means the Internal Revenue Code of 1986, as amended from time to time. - 3 - "Collateral" means accounts personal property of the Borrower, whether now existing or hereafter arising, which is subject or which is to be subject to the Liens granted by the Security Agreement. "Commitment" means the obligation of the Bank to extend revolving credit to the Borrower in accordance with the terms hereof in the aggregate principal amount of $2,250,000, as such amount may be reduced or otherwise modified from time to time in accordance with the terms hereof. "Current Portion of Borrower's Long Term Debt" means, on the date of determination, that portion of the Borrower's Debt (including Capital Leases) that is due and payable within the next 12 months and shall include the outstanding principal balance of the Loans hereunder. "Debt" means, with respect to any Person: (a) indebtedness of such Person for borrowed money; (b) indebtedness for the deferred purchase price of property or services; (c) the face amount of any outstanding letters of credit issued for the account of such Person; (d) obligations arising under acceptance facilities; (e) guaranties, endorsements (other than for collection in the ordinary course of business) and other contingent obligations to purchase, to provide funds for payment, to supply funds to invest in any Person, or otherwise to assure a creditor against loss; (f) obligations secured by any Lien on property of such Person; (g) obligations of such Person as lessee under Capital Leases; and (h) indebtedness of such Person evidenced by a note, bond, indenture or similar instrument. - 4 - "Default" means any event which with the giving of notice or lapse of time, or both, would become an Event of Default. "Default Rate" means, with respect to the principal of any Loan and, to the extent permitted by law, any other amount payable by the Borrower under this Agreement or the Note a rate per annum equal to 2% above the rate of interest otherwise applicable to such Loan or other amount. "Depreciation" means depreciation in accordance with GAAP. "Dividends" means, for any period, dividends paid by the Borrower. "Dollars" and the sign "$" mean lawful money of the United States of America. "EBIT" means, for any period with respect to any entity, the sum of (i) net income for such period, calculated without taking into account the aggregate amount of extraordinary losses or extraordinary gains during such period plus (ii) the aggregate amount of income taxes for such period plus (iii) Interest Expenses for such period. "Effective Net Worth" means, at any particular date, (i) the amount of excess of Total Assets over Total Liabilities which would, in conformity with GAAP, be included under shareholders' equity on a balance sheet of the Borrower as at such date, excluding, however, from the determination of Total Assets all intangible assets, including, without limitation, - 5 - organizational expenses, patents, trademarks, copyrights, goodwill, covenants not to compete, research and developmental costs, training costs, and deferred charges, less (ii) all amounts due at any time and from time to time from Affiliates, less (iii) all shareholder loans, less (iv) all treasury stock. "Eligible Receivables" shall mean the gross amount of the Borrower's accounts receivable, arising out of sales in the ordinary course of business made by the Borrower which are not in dispute or subject to credit, allowance, defense, offset, counterclaim or adjustment (other than any discount allowed for prompt payment) and for which records are maintained at a location of the Borrower in the United States; provided however, that the following items shall not be deemed Eligible Receivables: intercompany accounts (i.e., owing from any affiliate of the Borrower); credit balances over 90 days from invoice date; sales tax and freight charges; government accounts; deposits/prepayments; contra accounts; foreign accounts; and amounts billed not shipped. "Environmental Laws" means any and all federal, state, local and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or other governmental restrictions relating to the protection of the environment (including, without limitation, ambient air, surface water, ground water, or land), including, without limitation, any of the same relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes or that relate to emissions, discharges, releases or threatened releases of pollutants, - 6 - contaminants, chemicals, or industrial, toxic or hazardous substances or wastes into the environment. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, including any rules and regulations promulgated thereunder. "ERISA Affiliate" means any corporation or trade or business which is a member of the same controlled group of corporations (within the meaning of Section 414(b) of the Code) as the Borrower or is under common control (within the meaning of Section 414(c) of the Code) with the Borrower. "Event of Default" has the meaning given such term in Section 8.01. "Facility Documents" means this Agreement, the Note, the Security Agreement, the Guaranty, and all other documents or instruments executed in connection herewith or therewith. "Forfeiture Proceeding" means the commencement by any governmental agency or governmental instrumentality of any prejudgment action or proceeding affecting the Borrower pursuant to any statute, rule or regulation which permits any governmental agency or governmental instrumentality to obtain a prejudgment seizure or forfeiture of any of their property. - 7 - "GAAP" means generally accepted accounting principles in the United States of America as in effect from time to time, applied on a basis consistent with those used in the preparation of the financial statements referred to in Section 5.05. "Guarantor" means COMFORCE Corporation, a Delaware corporation. "Guaranty" means the Guaranty dated the date hereof and executed by the Guarantors in favor of the Bank. "Hazardous Substance" means any material, whether animate or inanimate, raw, processed or waste by-product, which in itself or as found or used, is potentially toxic, noxious or harmful to the health or safety of human or animal life or vegetation, regardless of whether such material be found on or below the surface of the ground, in any surface or underground water, or airborne in ambient air or in the air inside of any structure built or located upon or below the surface of the ground, or in any machinery, equipment or inventory located or used in any such structure, including, but in no event limited to, all hazardous materials, hazardous wastes, toxic substances, infectious wastes, pollutants and contaminants from time to time defined or classified as such under any Environmental Law regardless of the quantity found, used, manufactured or removed from a given location. "Interest Expense" means the Borrower's interest expense as reflected in its financial statements and calculated in accordance with GAAP. - 8 - "Leverage Ratio" shall mean, at a particular date for any entity, such entity's ratio of Total Unsubordinated Liabilities to Effective Net Worth. "Lien" means any lien (statutory or otherwise), security interest, mortgage, deed of trust, priority, pledge, charge, conditional sale, title retention agreement, Capital Lease or other encumbrance or similar right of others, or any agreement to give any of the foregoing. "Loan" shall mean any loan made by the Bank pursuant to Section 2.01 hereof. "Margin" means (i) 1% on the date hereof; (ii) upon the Borrower's receipt of a $1,000,000 equity infusion from the Guarantor and if the aggregate outstanding principal balance of the Loans hereunder is less than the then applicable Borrowing Base, 1/2 of 1%; and (iii) if the Borrower's Leverage Ratio, as evidenced on financial statements provided to the Bank pursuant to Section 5.08 hereof, is less than 1.0:1.0 and if each of the conditions specified in the preceding clause of this definition are satisfied, 0%. "Multiemployer Plan" means a Plan defined as such in Section 4001(a)(3) of ERISA to which contributions have been made by the Borrower or any ERISA Affiliate and which is covered by Title IV of ERISA. "Net Income" means with respect to any entity for any period, such entity's net income after taxes for such period as reflected on such entity's financial statements. - 9 - "Non-Cash Charges" means all charges and expenses reflected on the Borrower's income statement in accordance with GAAP which do not require a decrease in or payment of cash. "Note" means the promissory note of the Borrower in the form of Exhibit A hereto evidencing the Loans made by the Bank hereunder. "Obligors" means, collectively, the Borrower and the Guarantor. "PBGC" means the Pension Benefit Guaranty Corporation and any entity succeeding to any or all of its functions under ERISA. "Person" means an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture, governmental authority or other entity of whatever nature. "Plan" means any employee benefit or other plan established or maintained, or to which contributions have been made, by the Borrower or any ERISA Affiliate and which is covered by Title IV of ERISA or to which Section 412 of the Code applies provided that such term shall not include plans terminated prior to the date hereof. "Prime Rate" means that rate of interest from time to time announced by the Bank at its principal office as its prime commercial lending rate. - 10 - "Purchase Agreement" means that certain Purchase Agreement dated the 29th day of February 1996 and executed by the Borrower, as Purchaser, the Seller and Bruce Anderson, an individual residing at Route 1, Box 19A, Wauchula, Florida. "Reportable Event" means any of the events set forth in Section 4043(b) of ERISA as to which events the PBGC by regulation has not waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event, provided that a failure to meet the minimum funding standard of Section 412 of the Code or Section 302 of ERISA shall be a Reportable Event regardless of any waivers given under Section 412(d) of the Code. "Security Agreement" means the Security Agreement to be delivered by the Borrower under the terms of this Agreement. "Seller" means Williams Communication Services, Inc., a Florida corporation, as "Seller" under the Purchase Agreement. "Solvent" means when used with respect to any Person on a particular date, that on such date: (a) the present fair saleable value of its assets is in excess of the total amount of its liabilities, including, without limitation, the reasonably expected amount of such Person's obligations with respect to contingent liabilities, (b) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its Debts as they become absolute and matured, (c) such Person - 11 - does not intend to, and does not believe that it will, incur Debts or liabilities beyond such Person's ability to pay as such Debts and liabilities mature and (d) such Person is not engaged in business or a transaction, for which such Person's property would constitute an unreasonably small capital. "Subordinated Debt" means unsecured Debt of the Borrower that is subordinated on terms satisfactory to the Bank to the Borrower's obligations to the Bank under this Agreement. "Subsidiary" means, as to any Person, any corporation or other entity of which at least a majority of the securities or other ownership interests having ordinary voting power (absolutely or contingently) for the election of directors or other persons performing similar functions are at the time owned directly or indirectly by such Person. "Tangible Net Worth" means, at any particular date, the amount of excess of Total Assets over Total Liabilities which would, in conformity with GAAP, be included under shareholders' equity on a balance sheet of the Borrower as at such date, excluding, however, from the determination of Total Assets all intangible assets, including, without limitation, organizational expenses, patents, trademarks, copyrights, goodwill, covenants not to compete, research and developmental costs, training costs, and deferred charges. "Termination Date" means the earlier of (i) the date on which the Revolving Credit Loans are paid in full and the Commitment shall terminate hereunder and the - 12 - obligations of the Borrower in connection therewith have been satisfied or (ii) February 28, 1997; provided that if such date is not a Business Day, the Termination Date shall be the next succeeding Business Day. "Total Assets" means, at a particular date, all amounts which would, in conformity with GAAP, be included under assets on a balance sheet of the Borrower as at such date. "Total Current Assets" means, at a particular time, excluding the Borrower's cash plus accounts receivable, excluding inter-company accounts receivable, plus inventory. "Total Current Liabilities" means, at a particular date, all amounts which would, in conformity with GAAP, be included under current liabilities on a balance sheet of the Borrower as at such date and shall include, without limitation (a) all obligations payable on demand or within one year after the date on which the determination is made, and (b) all obligations of the Borrower under the Revolving Credit Facility. "Total Liabilities" means, at a particular date, all amounts which would, in conformity with GAAP, be included under liabilities on a balance sheet of the Borrower as at such date. "Total Unsubordinated Liabilities" means Total Liabilities less Subordinated Debt. - 13 - "Unfunded Vested Liabilities" means, with respect to any Plan, the amount (if any) by which the present value of all vested benefits under the Plan exceeds the fair market value of all Plan assets allocable to such benefits, as determined on the most recent valuation date of the Plan and in accordance with the provisions of ERISA for calculating the potential liability of the Borrower or any ERISA Affiliate to the PBGC or the Plan under Title IV of ERISA. Section 1.02. Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with GAAP, and all financial data required to be delivered hereunder shall be prepared in accordance with GAAP. ARTICLE 2. REVOLVING CREDIT FACILITY. Section 2.01. Revolving Credit. The Bank agrees on the terms and conditions hereinafter set forth, to make loans (the "Loans") to the Borrower from time to time during the period from the date of this Agreement up to but not including the Termination Date in an aggregate amount not to exceed at any time outstanding Two Million Two Hundred Fifty Thousand Dollars ($2,250,000) (the "Commitment"); provided, however, that the aggregate principal amount of Loans outstanding pursuant to this Section 2.01 shall not at any time after April 15, 1996 exceed the Borrowing Base. The Loan is a revolving credit and the Borrower may, within the limits of the Commitment, borrow, prepay pursuant to Section 2.07, and reborrow under this Section 2.01. It is the intention of the Bank and the Borrower that the aggregate of all Loans shall at no time exceed the Commitment or, after April 15, 1996, the - 14 - Borrowing Base and the Borrower agrees that if at any time such excess shall to its knowledge arise, or if notified by the Bank that such excess has arisen, the Borrower will promptly file a Borrowing Base Certificate reflecting such fact and immediately repay the amount of such excess. Section 2.02. The Revolving Credit Note. The Loans shall be evidenced by a single Note in favor of the Bank substantially in the form of Exhibit A with appropriate insertions, duly executed and completed by the Borrower. The Bank is hereby authorized to record the date and amount of each Loan, the date and amount of each payment or prepayment of principal thereof and the principal amount subject thereto in the Bank's records and/or on the schedules annexed to and constituting a part of the Note, and any such recordation shall constitute prima facie evidence of the accuracy of the information so recorded; provided that the failure to make any such recordation shall not in any way affect the Borrower's obligation to repay the Loans. The Note (a) shall be dated the date hereof, (b) be stated to mature on the Termination Date and (c) shall bear interest from and including the date hereof on the unpaid principal amount thereof from time to time outstanding as provided herein. Section 2.03. Use of Proceeds. (a) The Borrower shall use the proceeds of the Loans to finance the acquisition of certain assets of the Seller to finance future Acquisitions subject to the terms and conditions hereof, and for general working capital purposes. No part of the proceeds of - 15 - any of the Loans will be used for any purpose which violates the provisions of Regulation G, T, U or X of the Board of Governors of the Federal Reserve System as in effect on the date of making such Loans. (b) The Borrower agrees to indemnify the Bank and hold the Bank harmless from and against any and all liabilities, losses, damages, costs and expenses of any kind (including, without limitation, the reasonable fees and disbursements of counsel for the Bank in connection with any investigative, administrative or judicial proceeding, whether or not the Bank shall be designated a party thereto) which may be incurred by the Bank, relating to or arising out of any actual or proposed use of proceeds of Loans hereunder. Section 2.04. Notice and Manner of Borrowing. At such times as the Borrower desires a Loan hereunder, the Borrower shall give the Bank telephonic notice of requests for any Loans under this Agreement not later than 1:00 p.m. (New York time) on the date of such Loan, specifying the amount thereof, immediately followed by telefax written confirmation of such Loan request. So long as all Borrowing Base Certificates required to be delivered to the Bank have been delivered and upon fulfillment of the applicable conditions set forth in Article 3, the Bank will make such Loan available to the Borrower in immediately available funds by crediting the amount thereof to the Borrower's account with the Bank. Section 2.05. Interest on Revolving Credit Loans. The Borrower shall pay interest on the outstanding and unpaid principal amount of each Loan made under this Agreement at a fluctuating rate per annum equal to the Prime Rate from time to time in effect - 16 - plus the applicable Margin. Each change in the interest rate shall take effect simultaneously with the corresponding change in the Prime Rate. Interest shall be calculated on the basis of the actual number of days elapsed divided by a year of three hundred sixty (360) days and shall be paid to the Bank in arrears on the first day of each calendar quarter and on the Termination Date. Any principal amount not paid when due (at maturity, on acceleration, or otherwise) shall bear interest thereafter until paid at the Default Rate. Section 2.06. Minimum Amounts. Except for borrowings which exhaust the full remaining amount of the Commitment, and prepayments which result in the prepayment of all Loans, each borrowing and prepayment of principal of Loans shall be in an amount at least equal to $25,000, and, if greater, integral multiples of $5,000. Section 2.07. Revolving Commitment Fee. The Borrower shall pay to the Bank a commitment fee equal to one-quarter of one percent (0.25%) on the average daily unused portion of the Commitment. The commitment fee shall be due and payable in arrears on the first day of each calendar quarter and on the Termination Date. Section 2.08. Default Interest. Notwithstanding any other provision of this Agreement, upon the occurrence and continuance of an Event of Default, each Loan outstanding hereunder shall bear interest at a rate per annum equal to the Default Rate. Section 2.09. Payments Generally. All payments under this Agreement or the Notes, shall be made in Dollars in immediately available funds not later than 1:00 p.m. New - 17 - York City time on the relevant dates specified above (each such payment made after such time on such due date to be deemed to have been made on the next succeeding Business Day) at the Bank's office located at 1 Greenway Plaza, 135 Pinelawn Road, Melville, New York 11747; provided that, when a new Loan is to be made by the Bank on a date the Borrower is to repay any principal of an outstanding Loan, the Bank shall apply the proceeds thereof to the payment of the principal to be repaid and only an amount equal to the difference between the principal to be borrowed and the principal to be repaid shall be made available by the Bank to the Borrower as provided in Section 2.04 or paid by the Borrower to the Bank pursuant to this Section 3.05, as the case may be. The Bank may (but shall not be obligated to) debit the amount of any such payment which is not made by such time to any ordinary deposit account of the Borrower with the Bank. The Borrower shall, at the time of making each payment under this Agreement or the Note, specify to the Bank the principal or other amount payable by the Borrower under this Agreement or the Note to which such payment is to be applied (and in the event that it fails to so specify, or if a Default or Event of Default has occurred and is continuing, the Bank may apply such payment as it may elect in its sole discretion). If the due date of any payment under this Agreement or the Note would otherwise fall on a day which is not a Business Day, such date shall be extended to the next succeeding Business Day and interest shall be payable for any principal so extended for the period of such extension. - 18 - ARTICLE 3. CONDITIONS PRECEDENT Section 3.01. Conditions to the Initial Borrowings Hereunder. The obligations of the Bank to make the Loans constituting the initial borrowing hereunder are subject to the conditions precedent that: (a) the Bank shall have received on or before the date of such Loans each of the following, in form and substance reasonably satisfactory to the Bank and its counsel: (i) the Note duly executed by the Borrower; (ii) a certificate of the Secretary or Assistant Secretary of each Obligor, dated the Closing Date, attesting to all corporate action taken by such Obligor, including resolutions of its Board of Directors authorizing the execution, delivery and performance of the Facility Documents and each other document to be delivered pursuant to this Agreement, together with certified copies of the certificate or articles of incorporation and the by-laws of such Obligor; each such certificate shall state that the resolutions and corporate documents thereby certified have not been amended, modified, revoked or rescinded as of the date of such certificate; (iii) a certificate of the Secretary or Assistant Secretary of each Obligor, dated the Closing Date, certifying the names and true signatures of the officers of - 19 - such Obligor executing the Facility Documents and the other documents to be delivered by such Obligor under this Agreement; (iv) a certificate of a duly authorized officer of the Borrower, dated the Closing Date, stating that the representations and warranties in Article 4 are true and correct on such date as though made on and as of such date (unless made as of a specific date earlier than the date hereof, in which case they shall be true and correct as of such earlier date) and that no event has occurred and is continuing which constitutes a Default or Event of Default; (v) the Security Agreement duly executed by the Borrower together with (a) Financing Statements on Form UCC-1 under the Uniform Commercial Code for all jurisdictions necessary or, in the opinion of the Bank, desirable to perfect the security interests created by the Security Agreement and (b) UCC search results identifying all of the financing statements on file with respect to the Borrower and the Seller in all jurisdictions referred to under (a), indicating that no party claims an interest in any of the Collateral; (vi) the Guaranty, duly executed by the Guarantor; (vii) a favorable opinion of counsel for the Obligors, dated the Closing Date, in form and substance satisfactory to the Bank and counsel; (viii) a "long form" good standing certificate from the Secretary of State of Delaware with respect to each of the Obligors; - 20 - (ix) a balance sheet of the Borrower as of September 30, 1995, and an income statement and statement of cash flows for the year-to-date period then ended, all prepared in accordance with GAAP; (x) such other documents, instruments, approvals, opinions and evidence as the Bank may reasonably require; (b) the Borrower shall have paid or caused to be paid all fees required to be paid hereunder or in connection herewith which are accrued through the date hereof; (c) the Obligors shall have obtained all consents, permits and approvals required in connection with the execution, delivery and performance by the Obligors of their respective obligations hereunder and under the other Facility Documents and such consents, permits and approvals shall continue in full force and effect; (d) the satisfactory evidence that the Borrower is not in default with respect to any material contractual obligations to which it is a party and that the Guarantor is not in default with respect to any material contractual obligation to which it is a party and which was entered on or after October 17, 1995; (e) satisfactory evidence that no litigation is pending or threatened against either Obligor which, if adversely determined, may have a materially adverse effect upon the - 21 - business, properties, assets, financial or other condition of such Obligor or on the ability of such Obligor to perform its obligations hereunder or under the Facility Documents; (f) satisfactory evidence that the Borrower is in compliance with all applicable laws and regulations, including without limitation all Environmental Laws, which, if the Borrower were not in compliance therewith, may have a materially adverse effect upon the business, properties, assets, financial or other condition of the Borrower, or on the ability of the Borrower to perform its obligations hereunder or under the Facility Documents; (g) the Bank shall have received a certified or executed copy of the Purchase Agreement, together with such other instruments or agreements executed in connection therewith as the Bank shall reasonably request; (h) evidence that prior to or concurrently with the closing of the transactions contemplated hereby, (A) the transactions contemplated by the Purchase Agreement shall have been consummated in accordance with the terms thereof and (B) as a result of the consummation of such transaction, the Borrower shall have acquired good and marketable title to all of the Acquired Assets, free and clear of all Liens; and (i) all legal matters in connection with this financing and in connection with the transactions contemplated by the Purchase Agreement shall be satisfactory to the Bank and its counsel. - 22 - Section 3.02. Conditions to All Borrowings. The obligations of the Bank to make any Loan (including the initial Loans) hereunder shall be subject to the further conditions precedent that on the date of such Loan: (a) the following statements shall be true: (i) the representations and warranties contained in Article 4 are true and correct on and as of the date of such Loan as though made on and as of such date (unless such representations and warranties are made as of a specific earlier date in which case they shall be true and correct as at such date); (ii) no Default or Event of Default has occurred and is continuing, or would result from such Loan; and (iii) no material adverse change shall have occurred in the business, financial condition or operations of either Obligor since the date of the most recent financial statements of such Obligor delivered to the Bank hereunder or in connection herewith; and (b) the Bank shall have received such approvals, opinions, documents or instruments as the Bank may have reasonably requested. Section 3.03. Deemed Representations. Unless the Borrower otherwise notifies the Bank prior to any borrowing, the acceptance by the Borrower of the proceeds of any Loan - 23 - shall constitute a representation and warranty that the statements contained in Section 3.02(a) are true and correct as of the date of such Loan. Section 3.04. Existing Relationship. The Borrower and the Bank agree that as of the date of this Agreement any line of credit made available by the Bank to the Borrower prior to the date of this Agreement shall be terminated. ARTICLE 4. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents and warrants that: Section 4.01. Incorporation, Good Standing and Due Qualification; Compliance with Law. Each Obligor is duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own its assets and to transact the business in which it is now engaged or proposed to be engaged, and is duly qualified as a foreign corporation and in good standing under the laws of each other jurisdiction in which such qualification is required. In addition, each Obligor is in compliance with all laws, treaties, rules or regulations, or determination of an arbitration or a court or other governmental authority, in each case applicable to or binding upon it or any of its property or to which it or any of its property is subject. Section 4.02. Corporate Power and Authority; No Conflicts. The execution, delivery and performance by each Obligor of the Facility Documents have been duly - 24 - authorized by all necessary corporate action and do not and will not: (a) require any consent or approval of its stockholders that has not been obtained; (b) contravene its charter or by-laws; (c) violate any provision of, or require any filing (other than filings contemplated hereby and/or by the other Facility Documents), registration, consent or approval under, any law, rule, regulation (including, without limitation, the provisions of Regulation G, T, U or X of the Board of Governors of the Federal Reserve System as in effect from time to time), order, writ, judgment, injunction, decree, determination or award presently in effect having applicability to such Obligor; (d) result in a breach of or constitute a default or require any consent under any indenture or loan or credit agreement or any other agreement, lease or instrument to which such Obligor is a party or by which any of its properties may be bound or affected; (e) result in, or require, the creation or imposition of any Lien, upon or with respect to any of the properties now owned or hereafter acquired by such Obligor other than Liens created by this Agreement and/or the other Facility Documents; or (f) cause such Obligor to be in default under any such rule, regulation, order, writ, judgment, injunction, decree, determination or award or any such indenture, agreement, lease or instrument. Section 4.03. Legally Enforceable Agreements. Each Facility Document is, or when delivered under this Agreement will be, a legal, valid and binding obligation of the Obligors, enforceable against the Obligors in accordance with its terms, except to the extent that such enforcement may be limited by general principles of equity or by applicable bankruptcy, insolvency and other similar laws affecting creditors' rights generally. - 25 - Section 4.04. Litigation. Except as disclosed in Schedule 4.04 attached hereto, there are no actions, suits or proceedings pending or, to the knowledge of the Borrower, threatened, against or affecting the Obligors, or either of them, before any court, governmental agency or arbitrator, which could materially adversely effect, in any one case or in the aggregate, the financial or other condition, operations, properties or business of Obligors, or either of them, or the ability of either Obligor to perform its obligations under the Facility Documents. Section 4.05. Financial Statements; Projections. (a) The balance sheet of the Borrower as at September 30, 1995, and the draft balance sheet of the Borrower as at December 31, 1995 and the related income statements and statements of cash flow of the Borrower for the fiscal periods then ended, and the accompanying notes, copies of which have been furnished to the Bank, fairly present the financial condition of the Borrower as at such dates and the results of the operations of the Borrower for the periods covered by such statements, all in accordance with GAAP consistently applied. As of the date hereof, there are no liabilities of the Borrower, fixed or contingent, which are material but are not reflected in the financial statements or in the notes thereto, other than liabilities arising in the ordinary course of business since December 31, 1995, and the liabilities created by this Agreement. No information, exhibit or report furnished by the Borrower to the Bank in connection with the negotiation of this Agreement contained any material misstatement of fact or omitted to state a material fact or any fact necessary to make the statements contained therein not materially misleading. Since the date of the most recent financial statements delivered to the Bank hereunder through the date of this Agreement, there has been no material adverse - 26 - change in the condition (financial or otherwise), business, operations or, to the knowledge of the Borrower, prospects of the Borrower. After the date of this Agreement to the extent that this representation is deemed made, there shall have been no material adverse change in the condition (financial or otherwise), business, operations or, to the knowledge of the Borrower, prospects of the Borrower. (b) The Borrower has also delivered to the Bank projections of the future operations of the Borrower. Such projections represent the best estimates of the Borrower as of the Closing Date and the Borrower does not expect any material deviation from such projections. Section 4.06. Ownership and Liens. The Borrower has title to, or valid leasehold interests in, all of its properties and assets, real and personal, reflected in the financial statements referred to in Section 4.05 (other than any properties or assets disposed of in the ordinary course of business) and in all of the Acquired Assets, and none of the properties and assets owned by the Borrower and none of its leasehold interests, is subject to any Lien, except as may be permitted hereunder. Section 4.07. Taxes. Each Obligor has filed all tax returns (federal, state and local) required to be filed and each Obligor has paid all taxes, assessments and governmental charges and levies thereon due, including interest and penalties, other than taxes, assessments and governmental charges and levies being contested in good faith by appropriate proceedings - 27 - and with respect to which adequate reserves in conformity with GAAP shall have been provided on the books of such Obligor. Section 4.08. ERISA. The Borrower and each ERISA Affiliate is in compliance in all material respects with all applicable provisions of ERISA. No Reportable Event has occurred with respect to any Plan; no notice of intent to terminate a Plan has been filed nor has any Plan been terminated; no circumstance exists which constitutes grounds under Section 4042 of ERISA entitling the PBGC to institute proceedings to terminate, or appoint a trustee to administer, a Plan, nor has the PBGC instituted any such proceedings; none of the Borrower nor any ERISA Affiliate has completely or partially withdrawn under Sections 4201 or 4204 of ERISA from a Multiemployer Plan; the Borrower and each of its ERISA Affiliates has met its minimum funding requirements under ERISA with respect to all of its Plans and there are no Unfunded Vested Liabilities; and none of the Borrower nor any ERISA Affiliate has incurred any liability to the PBGC under ERISA. Section 4.09. Subsidiaries. Except as disclosed on Schedule 4.09 annexed hereto, the Borrower has no Subsidiaries. Section 4.10. Credit Arrangements. Schedule 4.10 is a complete and correct list of all credit agreements, indentures, guaranties, Capital Leases and other investments, agreements and arrangements in effect on the date of this Agreement providing for or relating to extensions of credit to the Obligors (including agreements and arrangements for the issuance of letters of credit or for acceptance financing but excluding agreements or - 28 - arrangements relating to trade indebtedness) amount in respect of which the Obligors is in any manner directly or contingently obligated; and the maximum principal or face amounts of the credit in question, outstanding and which can be outstanding, are correctly stated, and all Liens of any nature given or agreed to be given as security therefor are correctly described or indicated in such Schedule. Section 4.11. Operation of Business. (i) Each Obligor possesses all licenses, permits, franchises, patents, copyrights, trademarks and trade names, or rights thereto, to conduct its business substantially as now conducted and as presently proposed to be conducted, and (ii) neither Obligor is in violation of any valid rights of others with respect to any of the foregoing. Section 4.12. Hazardous Substances. Except as disclosed in Schedule 4.04, each Obligor is in compliance with all Environmental Laws, and has obtained all necessary licenses and permits required to be issued pursuant to any Environmental Law. As of the date of this Agreement, neither Obligor has received any written notice or communication from any governmental agency with respect to (i) any Hazardous Substance relative to its operations, property or acts or (ii) any investigation, demand or request pursuant to or enforcing any Environmental Law relating to it or its operations, and no such investigation is pending or, to the knowledge of the Borrower, threatened. Section 4.13. No Default on Outstanding Judgments or Orders. Each Obligor has satisfied all judgments and neither Obligor is in default with respect to any judgment, - 29 - writ, injunction, decree, rule or regulation of any court, arbitrator or federal, state, municipal or other governmental authority, commission, board, bureau, agency or instrumentality, domestic or foreign. Section 4.14. No Defaults on Other Agreements. Neither Borrower, nor to the best of the Borrower's knowledge, the Guarantor, is a party to any indenture, loan or credit agreement or any lease or other agreement or instrument or subject to any charter or corporate restriction which would, in any case or in the aggregate, have a material adverse effect on its ability to carry out its obligations under the Facility Documents. The Borrower is not in default in any respect in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement or instrument material to its business to which it is a party. The Guarantor is not in default in any respect in the performance, observance, or fulfillment of any of the obligations, covenants or conditions contained in any agreement or instrument dated on or after October 17, 1995 material to its business to which it is a party. Section 4.15. Labor Disputes and Acts of God. Neither the business nor the properties of either Obligor is affected by any fire, explosion, accident, strike, lockout or other labor dispute, drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other casualty (whether or not covered by insurance), materially and adversely affecting such business or properties or the operations of the Obligors, or either of them. - 30 - Section 4.16. Governmental Regulation. Neither Obligor is subject to regulation under the Public Utility Holding Company Act of 1935, the Investment Company Act of 1940 or any other statute or regulation limiting its ability to incur indebtedness for money borrowed as contemplated hereby. Section 4.17. Partnerships. Neither Obligor is a partner in any partnership. Section 4.18. No Forfeiture. Neither Obligor is engaged in or proposed to be engaged in any unlawful activity which could result in a Forfeiture Proceeding and no Forfeiture Proceeding is pending against either Obligors or, to the best of the Borrower's knowledge, threatened. Section 4.19. No Default or Event of Default. No Default or Event of Default has occurred and is continuing. Section 4.20. Security Agreement. The provisions of the Security Agreement are effective to create in favor of the Bank a legal, valid and enforceable, security interest in all right, title and interest of the Borrower in the Collateral described therein except to the extent that enforceability may be limited by applicable bankruptcy, insolvency or other similar laws affecting creditors' rights generally. Section 4.21. Solvency. Upon consummation of the transactions contemplated by the Purchase Agreement, each Obligor is Solvent. - 31 - Section 4.22. Name Changes. During the five years prior to the making of this Agreement, except as disclosed on Schedule 4.22, the Borrower has not been known under, or transacted business using any name other than its current name nor has the Seller been known under or transacted business using any name except "Williams Communication Services, Inc.". Section 4.23. Relationships. There exists no actual or threatened termination, cancellation or limitation of or any modification or change in the business relationships of the Borrower with any customer or group of customers whose purchases individually or in the aggregate are material to the operations of the Borrower (or were material to the operations of the Seller immediately prior to the consummation of the transactions contemplated by the Purchase Agreement) or with any material supplier which would have a material adverse effect on the business, financial condition, properties or profits of the Borrower. ARTICLE 5. AFFIRMATIVE COVENANTS. So long as the Note shall remain unpaid or the Bank shall have any Commitment under this Agreement, the Borrower shall: Section 5.01. Maintenance of Existence. Except as otherwise provided in this Agreement, preserve and maintain its corporate existence and good standing in the jurisdiction of its incorporation, and qualify and remain qualified as a foreign corporation in each jurisdiction in which such qualification is required. - 32 - Section 5.02. Conduct of Business. Continue to engage in its current business. Section 5.03. Maintenance of Properties. Except as otherwise provided herein, maintain, keep and preserve all of its properties (tangible and intangible) necessary to the conduct of its business in good working order and condition, ordinary wear and tear excepted. Section 5.04. Maintenance of Records. Keep records and books of account, in which complete entries will be made in accordance with GAAP (or with comparable foreign accounting principles), reflecting all financial transactions of the Borrower. Section 5.05. Maintenance of Insurance. Maintain insurance with financially sound and reputable insurance companies or associations in such amounts and covering such risks as are usually carried by companies engaged in the same or a similar business and similarly situated. With respect to all such insurance coverage, the Borrower shall cause the Bank to be named additional insured as to all liability coverage and cause the Bank to be named loss payee as to all property insurance coverage. Section 5.06. Compliance with Laws. Comply in all material respects with all applicable laws, rules, regulations and orders. Section 5.07. Right of Inspection. At any reasonable time and from time to time permit the Bank or any agent or representative thereof, to examine and make copies and abstracts from the records and books of account of, and visit the properties of, the Borrower, - 33 - and to discuss the affairs, finances and accounts of the Borrower with its officers and directors and the Borrower's independent accountants. Section 5.08. Reporting Requirements. Furnish directly to the Bank: (a) Not later than the 15th Business Day of each calendar month, a monthly borrowing base certificate and monthly accounts receivable agings and inventory reports, each certified by the Borrower's President or Chief Financial Officer and each in form and substance reasonably satisfactory to the Bank; (b) Annually, within 120 days of the Borrower's fiscal year-end, the audited financial statements of the Borrower and of the Guarantor which shall include profit and loss statements, balance sheets, statements of cash flows and such other reports as the Bank shall require, each with an unqualified opinion of Coopers & Lybrand or another firm of independent certified public accountants reasonably acceptable to the Bank, together with a copy of the management letter prepared by such independent certified public accountants; (c) Quarterly, within 90 days after the end of each of the first, second and third fiscal quarters, quarterly financial statements of the Borrower and the Guarantor, which statements shall include profit and loss statements, balance sheets, statements of cash flows and such other reports as the Bank shall require, each prepared in accordance with GAAP, certified by the Borrower's President or Chief Financial Officer, and in form and substance reasonably satisfactory to the Bank; - 34 - (d) Simultaneously with the delivery of the financial statements referred to in subsections (b) and (c) above, a certificate of an officer of the Borrower (i) certifying that no Default or Event of Default has occurred and is continuing or, if a Default or Event of Default has occurred and is continuing, a statement as to the nature thereof and the action which is proposed to be taken with respect thereto, and (ii) with computations demonstrating compliance with the covenants contained in Article 7; (e) promptly after the Borrower becomes aware of the commencement thereof, notice of all actions, suits, and proceedings before any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, in which the Borrower is a party, including, without limitation, any such proceeding relating to any alleged violation of any Environmental Law, which, if determined adversely to the Borrower, would have a material adverse effect on the financial condition, properties, or operations of the Borrower, or on the ability of the Borrower to perform its obligations hereunder or under the other Facility Documents; (f) as soon as possible and in any event within five business days after the occurrence of each Default or Event of Default, a written notice specifying and describing in reasonable detail such Default or Event of Default and describing in reasonable detail the action which is proposed to be taken by the Borrower with respect thereto; (g) promptly after the commencement thereof or promptly after the Borrower knows of the commencement or threat thereof, notice of any Forfeiture Proceeding; - 35 - (h) promptly upon becoming available, copies of all financial statements, reports, notices and proxy statements sent or made available generally by Borrower or the Guarantor to its security holders, of all regular and periodic reports and all registration statements and prospectuses filed by the Borrower or the Guarantor with any securities exchange or with the Securities and Exchange Commission or any governmental body succeeding to any of its functions, and of all statements generally made available by Borrower or the Guarantor concerning material developments in the business of the Borrower or the Guarantor. (i) as soon as possible and in any event within five business days after the Borrower knows that any of the events or conditions specified below with respect to any Plan or Multiemployer Plan have occurred or exist, a statement signed by an officer of the Borrower setting forth details respecting such event or condition and the action, if any, which the Borrower or its ERISA Affiliate proposes to take with respect thereto (and a copy of any report or notice required to be filed with or given to PBGC by the Borrower, or an ERISA Affiliate with respect to such event or condition): (i) any Reportable Event; (ii) the filing under Section 4041 of ERISA of a notice of intent to terminate any Plan or the termination of any Plan; - 36 - (iii) the institution by PBGC of proceedings under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the receipt by the Borrower, or any ERISA Affiliate, of a notice from a Multiemployer Plan that such action has been taken by PBGC with respect to such Multiemployer Plan; (iv) the complete or partial withdrawal by the Borrower or any ERISA Affiliate under Section 4201 or 4204 of ERISA from a Multiemployer Plan, or the receipt by the Borrower, or any ERISA Affiliate, of notice from a Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA or that it intends to terminate or has terminated under Section 4041A of ERISA; and (v) the institution of a proceeding by a fiduciary or any Multiemployer Plan against the Borrower or any ERISA Affiliate to enforce Section 515 of ERISA, which proceeding is not dismissed within 30 days; (j) as soon as available and in any event within 15 days after the end of each calendar month an accounts receivable aging in form and substance satisfactory to the Bank as of the last day of such month; and (k) as soon as available, and in any event within 15 days of the end of each calendar month a certificate of an officer of the Borrower certifying that the Borrower's payroll taxes are current; - 37 - (l) such other information respecting the condition or operations, financial or otherwise, of the Borrower as the Bank may from time to time reasonably request. Section 5.09. Payment of Obligations. Pay, discharge or otherwise satisfy at or before maturity or before they become delinquent by its specific term, or if there are no specific terms before an action for collection is commenced, as the case may be, all of its material Debt and other material obligations of whatever nature (including any obligation for taxes and wages). Section 5.10. Escrow Funds under Purchase Agreement. If the Borrower receives a refund of any portion of the purchase price escrowed pursuant to the Purchase Agreement, the Borrower shall apply such amounts to reduce the outstanding principal balance of the Loans hereunder on a dollar for dollar basis. Section 5.11. Business Acquired under Purchase Agreement. The Borrower shall conduct the business acquired under the Purchase Agreement as a division of the Borrower. ARTICLE 6. NEGATIVE COVENANTS. So long as the Note shall remain unpaid or the Bank shall have any Commitment under this Agreement, the Borrower shall not: - 38 - Section 6.01. Debt. Create, incur, assume or suffer to exist any Debt, except for any of the following types of Debt: (a) Debt of the Borrower under this Agreement or the Note; (b) Debt described in Schedule 4.10, and any renewals, extensions or refinancing thereof, provided that such renewals, extensions or refinancing are on terms no less favorable to the Borrower than the original terms of such Debt; (c) Subordinated Debt; (d) Debt incurred in connection with operating leases or Capital Leases entered into by the Borrower, consistent with past practices or in the ordinary course of business; (e) Debt of the Borrower secured by purchase money Liens permitted by Section 6.02; and (f) unsecured trade indebtedness incurred in the ordinary course of business. Section 6.02. Liens. Create, incur, assume or suffer to exist any Lien, upon or with respect to any of its properties, n ow owned or hereafter acquired, except: - 39 - (a) Liens in favor of the Bank securing the Loans hereunder; (b) Liens for taxes or assessments or other government charges or levies if not yet due and payable or if due and payable if they are being contested in good faith by appropriate proceedings and for which appropriate reserves are maintained in conformity with GAAP; (c) Liens imposed by law, such as mechanic's, supplier's, materialmen's, landlord's, warehousemen's and carrier's Liens, and other similar Liens, securing obligations incurred in the ordinary course of business which are not past due for more than 30 days, or which are being contested in good faith by appropriate proceedings and for which appropriate reserves have been established; (d) Liens under workers' compensation unemployment insurance, social security or similar legislation (other than ERISA); (e) easements, zoning restrictions, rights-of-way, and other similar restrictions and encumbrances which, in the aggregate, do not materially interfere with the occupation, use and enjoyment by the Borrower of the property or assets encumbered thereby in the normal course of its business or materially impair the value of the property subject thereto; - 40 - (f) purchase money Liens on any property heretofore or hereafter acquired or the assumption of any Lien on property existing at the time of such acquisition, or a Lien incurred in connection with any conditional sale or other title retention agreement or a Capital Lease or an operating lease; provided that such liens attach only to the property as acquired and do not extend to any additional property of the Borrower; and (g) Liens existing on the date hereof and described on Schedule 4.10 hereto. Section 6.03. Investments and Advances. Make any loan or advance to any Person or, except as otherwise provided herein, purchase or otherwise acquire any capital stock, assets, obligations or other securities of, make any capital contribution to, or otherwise invest in, or acquire any interest in, any Person. Section 6.04. Sale of Assets. Sell, lease, assign, transfer or otherwise dispose of any of its now owned or hereafter acquired assets except: (a) for assets disposed of in the ordinary course of business; or (b) the sale or other disposition of assets no longer used or useful in the conduct of its business. Section 6.05. Transactions with Affiliates. Enter into any transaction, including, without limitation, the purchase, sale or exchange of property or the rendering of any service, with any Affiliate, except in the ordinary course of and pursuant to the reasonable requirements of the Borrower's business and upon fair and reasonable terms not - 41 - materially less favorable to the Borrower than would be obtained in a comparable arm's length transaction with a Person not an Affiliate. Section 6.06. Mergers, Etc. Except in connection with an Acquisition permitted under Section 6.07, merge or consolidate with, or sell, assign, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets (whether now owned or hereafter acquired) to any Person, or acquire all or substantially all of the assets or the business of any Person (or enter into any agreement to do any of the foregoing). Section 6.07. Acquisitions. Make any Acquisition unless the Bank shall have been delivered such documents as are necessary in the Bank's discretion to permit the Bank to have a perfected lien upon the assets so acquired and unless the Bank shall have first been provided a management prepared balance sheet of the Borrower demonstrating compliance on a pro forma basis, with the covenants contained in Article 7 immediately after the Acquisition, and unless the Bank shall have been provided satisfactory evidence that the sum of all consideration paid or to be paid (including all future payments other than contingent consideration to be paid based upon the performance of the company or assets acquired, whether or not such payments are to be paid during such fiscal year) by the Borrower in connection with such Acquisition, when aggregated with the consideration paid or to be paid in connection with all other Acquisitions during such fiscal year, does not exceed $500,000. Notwithstanding the foregoing, no Acquisition shall be permitted hereunder unless (i) the Guarantor shall have made an equity contribution to the Borrower of $1,000,000 or more, - 42 - which shall have been applied by the Borrower to reduce the outstanding principal balance of the Loans hereunder and (ii) the Bank shall be satisfied that the Borrower's outstanding loans shall be less than the Borrowing Base immediately before and after the relevant Acquisition. Section 6.08. No Activities Leading to Forfeiture. Engage in any unlawful activity which could result in a Forfeiture Proceeding. Section 6.09. Corporate Documents; Fiscal Year. Change its fiscal year or amend, modify or supplement its certificate or articles of incorporation or by-laws in any way which would adversely affect (i) the ability of the Bank to exercise its remedies hereunder or under the Facility Documents, or (ii) the Borrower to perform its obligations hereunder or under the Facility Documents. Section 6.10. Subsidiaries; Partnerships. Create, any new Subsidiaries or become a partner in a partnership without the consent of the Bank, or permit its Subsidiary, Sumtech, Inc., to have at any time assets of more than $5,000 or to incur Debt. ARTICLE 7. FINANCIAL COVENANTS. So long as the Note shall remain unpaid or the Bank shall have any Commitment under this Agreement: - 43 - Section 7.01. Maximum Leverage. The Borrower shall maintain at each of the dates set forth below a ratio of (A) Total Unsubordinated Liabilities to (B) Effective Net Worth of not more than the amounts set forth opposite such date: Period Ratio ------ ------- 6/30/96 1.5:1.0 9/30/96 1.25:1.0 12/31/96 1.0:1.0 Section 7.02. Minimum Coverage Ratio. The Borrower shall maintain at each of the dates set forth below a ratio of (A) Total Current Assets to (B) Total Liabilities of not less than the ratios set forth opposite such dates: Date Ratio ---- ----- 6/30/96 1.25:1.0 9/30/96 1.25:1.0 12/31/96 1.50:1.0 Section 7.03. Dividends. During the term of this Agreement, the Borrower shall not pay Dividends. Section 7.04. No Quarterly Losses. During the term of this Agreement, the Borrower shall not suffer a loss in any fiscal quarter. Section 7.05. Minimum Net Retained Profit. The Borrower shall retain profits of at least $1,500,000 during its fiscal year ending December 31, 1996. - 44 - Section 7.06. Minimum Interest Coverage. The Borrower shall maintain a ratio of (A) EBIT to (B) Interest Expense of not less than 4.0:1.0 on June 30, 1996, September 30, 1996 and December 31, 1996. Compliance with all of the financial covenants contained in this Article 7 shall be determined by reference to the financial statements of the Borrower delivered to the Bank in accordance with Section 5.08 hereof. ARTICLE 8. EVENTS OF DEFAULT. Section 8.01. Events of Default. Any of the following events shall be an "Event of Default": (a) The Borrower shall (i) fail to pay the principal of or interest on the Note as and when due and payable; or (ii) fail to pay any fee or other amount due hereunder as and when due and payable and in the case of this clause (ii) only such failure shall continue for a period of 15 days after notice; (b) Any representation or warranty made or deemed made by the Borrower in this Agreement or in any other Facility Document or which is contained in any certificate, document, opinion, financial or other statement furnished to the Bank at any time pursuant to any Facility Document shall prove to have been incorrect in any material respect on or as of the date made or deemed made; - 45 - (c) (i) The Borrower shall fail to perform or observe any term, covenant or agreement contained in Sections 2.03(b), or in Article 6 or 7; or (ii) either Obligor fail to perform any other term, covenant or agreement on its part to be performed or observed (other than obligations specifically referred to in Section 8.01(a)) in any Facility Document and, in the case of this clause (ii) only, such failure shall continue for 30 consecutive days or, if such failure cannot by its nature be cured within 30 days, for such longer period as may be reasonably necessary to cure such failure provided that the Borrower shall diligently attempt to correct such failure and shall have provided the Bank with satisfactory assurance that such failure will be cured; (d) Either Obligor shall: (i) fail to make when due any payments with respect to any Debt, including but not limited to indebtedness for borrowed money (other than the payment obligations described in (a) above), of such Obligor, or any interest or premium thereon, when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) or, if such Debt has no stated due date, before an action for collection is commenced, unless, in either case, such Debt is being contested in good faith and with respect to which adequate reserves are maintained in accordance with GAAP; or (ii) fail to perform or observe any term, covenant or condition on its part to be performed or observed under any agreement or instrument relating to any Debt when required to be performed or observed, if the effect of such failure to perform or observe is to accelerate, or to permit the acceleration of, after the giving of notice or passage of time, or both, the maturity of such Debt, whether or not such failure to perform or observe shall be waived by the holder of such Debt; or (iii) - 46 - any Debt shall be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment) prior to the stated maturity thereof; (e) Either Obligor (i) shall generally not, or be unable to, or shall admit in writing its or their inability to, pay its or their debts as such debts become due; or (ii) shall make an assignment for the benefit of creditors, petition or apply to any court or otherwise for the appointment of a custodian, receiver or trustee for it or a substantial part of its or their assets; or (iii) shall, as debtor, commence any proceeding under any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, whether now or hereafter in effect; or (iv) shall have had any such petition or application filed or any such proceeding shall have been commenced, against it in which an adjudication or appointment is made or order for relief is entered, and which petition, application or proceeding remains undismissed for a period of 45 days or more, or (v) by any act or omission shall indicate its or their consent to, approval of or acquiescence in any such petition, application or proceeding or order for relief or the appointment of a custodian, receiver or trustee for all or any substantial part of its or their property; (vi) shall suffer any such custodianship, receivership or trusteeship to continue undischarged for a period of 45 days or more; or (vii) shall cease to be Solvent; (f) One or more judgments, decrees or orders for the payment of money in excess of $50,000 in the aggregate in respect of uninsured or unbonded claims shall be rendered against either Obligor and such judgments, decrees or orders shall continue - 47 - unsatisfied and in effect for a period of 30 consecutive days without being vacated, discharged, satisfied or stayed or bonded pending appeal; (g) An event or condition specified in Section 5.08(g) hereof shall occur or exist with respect to any Plan or Multiemployer Plan and, as a result of such event or condition, together with all other such events or conditions, the Borrower or any ERISA Affiliate shall incur or in the opinion of the Bank shall be reasonably likely to incur a liability to a Plan, a Multiemployer Plan or PBGC (or any combination of the foregoing) which is, in the reasonable determination of the Bank, material in relation to the financial condition, operations, business or prospects of the Borrower; (h) Any Forfeiture Proceeding shall have been commenced or the Borrower shall have given the Bank written notice of the commencement of any Forfeiture Proceeding as provided in Section 5.08(f); (i) The Security Agreement shall at any time after its execution and delivery and for any reason, cease: (a) to create a valid and perfected first priority security interest in and to property purported to be subject to the Security Agreement; or (b) to be in full force and effect or shall be declared null and void, or the validity or enforceability thereof shall be contested by the Borrower or the Borrower shall deny that it has any further liability or obligation under a Security Agreement, or the Borrower shall fail to perform any of its material obligations under the Security Agreement; - 48 - (j) The Guaranty shall at anytime after its execution and delivering and for any reason cease to be in full force and effect or shall be declared null and void, or the validity or enforceability thereof shall be contested by the Guarantor or the Guarantor shall deny that it has further liability or obligation under the Guaranty or the Guarantor shall fail to perform any of its material obligations under the Guaranty; and (k) If the Guarantor shall fail to make an equity infusion to the Borrower of at least $1,000,000 on or before April 15, 1996 or the Borrower shall fail to apply the full amount of such equity infusion to reduce the principal balance of the Loans. Section 8.02. Remedies. If any Event of Default shall occur, the Bank may, by notice to the Borrower, (a) declare the Commitment to be terminated, whereupon the same shall forthwith terminate, and (b) declare the outstanding principal of the Note, all interest thereon and all other amounts payable under this Agreement and the Note to be forthwith due and payable, whereupon the Note, all such interest and all such amounts shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrower; provided that, in the case of an Event of Default referred to in Section 8.01(e) or Section 8.01(h) above, the Commitment shall be immediately terminated, and the Note, all interest thereon and all other amounts payable under this Agreement and the Note shall be immediately due and payable without notice, presentment, demand, protest or other formalities of any kind, all of which are hereby expressly waived by the Borrower. - 49 - ARTICLE 9. MISCELLANEOUS. Section 9.01. Amendments and Waivers. Except as otherwise expressly provided in this Agreement, any provision of this Agreement may be amended or modified only by an instrument in writing signed by the Borrower and the Bank. No failure on the part of the Bank to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof or preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. Section 9.02. Usury. Anything herein to the contrary notwithstanding, the obligations of the Borrower under this Agreement and the Note shall be subject to the limitation that payments of interest shall not be required to the extent that receipt thereof would be contrary to provisions of law applicable to the Bank limiting rates of interest which may be charged or collected by the Bank. Section 9.03. Expenses. The Borrower shall pay on demand all costs and expenses in connection with the preparation, execution, delivery, filing, recording and administration of the Agreement, the Note and the other Facility Documents, including without limitation, the reasonable fees and out of pocket expenses of counsel for the Bank with respect thereto and with respect to advising the Bank as to its rights and responsibilities under any of the Facility Documents. The Borrower shall reimburse the Bank for all of its reasonable costs and expenses in connection with the enforcement or preservation of any - 50 - rights under this Agreement, the Note or the other Facility Documents. The Borrower agrees to indemnify the Bank and its directors, officers, employees and agents from, and hold each of them harmless against, any and all losses, liabilities, claims, damages or expenses incurred by any of them arising out of or by reason of any investigation or litigation or other proceedings (including any threatened investigation or litigation or other proceedings) relating to any actual or proposed use by the Borrower of the proceeds of the Loans, including, without limitation, the reasonable fees and disbursements of counsel incurred in connection with any such investigation or litigation or other proceedings (but excluding any such losses, liabilities, claims, damages or expenses incurred by reason of the gross negligence or willful misconduct of the Person to be indemnified). Section 9.04. Assignment; Participation. This Agreement shall be binding upon, and shall inure to the benefit of, the Borrower, the Bank and their respective successors and assigns, except that the Borrower may not assign or transfer their rights or obligations hereunder. Section 9.05. Notices. All notices and other communications provided for under this Agreement and under the other Facility Documents shall be in writing (including telegraphic or telefax communication) and mailed, telegraphed, telefaxed or delivered, if to the Borrower, at 2001 Marcus Avenue, Lake Success, New York 11042; Telecopier (516) 352-3362; Attention: Christopher P. Franco; and if to the Bank, at its address at 1 Greenway Plaza, 135 Pinelawn Road, Melville, New York 11747; Telecopier: (516) 756-0260; Attention: Stephen M. Zajac, Second Vice President; or, as to each party, at such other address as shall - 51 - be designated by such party in a written notice to the other party complying as to delivery with the terms of this Section 9.05. All such notices and communications shall, if telefaxed or telegraphed, be effective when delivered to the telegraph or telephone company, respectively, provided that the party sending such notice or communication promptly confirms the same by overnight delivery service addressed as aforesaid, or if mailed, three days after deposited in the mails addressed as aforesaid. Section 9.06. Setoff. The Borrower agrees that, in addition to (and without limitation of) any right of setoff, banker's lien or counterclaim the Bank may otherwise have, the Bank shall be entitled, at its option without any prior notice to the Borrower (any such notice being expressly waived by the Borrower to the extent permitted by applicable law), to offset balances (general or special, time or demand, provisional or final) held by it for the account of the Borrower or any of them at any of the Bank's offices, in Dollars or in any other currency, against any amount then due and payable by the Borrower to the Bank under this Agreement or the Note which is not paid when due (regardless of whether such balances are then due to the Borrower). Payments by the Borrower hereunder shall be made without setoff or counterclaim. Section 9.07. Jurisdiction; Immunities. (a) The Borrower hereby irrevocably submits to the jurisdiction of any New York State or United States Federal court sitting in New York County over any action or proceeding arising out of or relating to this Agreement or the Note, and the Borrower hereby - 52 - irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such New York State or Federal court. To the extent permitted by applicable law, the Borrower irrevocably consents to the service of any and all process in any such action or proceeding by the mailing (by certified or registered mail) of copies of such process to it at its address specified in Section 9.05. The Borrower agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. To the extent permitted by applicable law, the Borrower further waives any objection to venue in such State or Federal Court and any objection to an action or proceeding in such State or Federal Court on the basis of forum non conveniens. The Borrower further agrees that any action or proceeding brought against the Bank shall be brought only in New York State or United States Federal court sitting in New York County. (b) EACH OF THE PARTIES HERETO WAIVES ANY RIGHT IT MAY HAVE TO JURY TRIAL. (c) Nothing in this Section 9.07 shall affect the right of the Bank to serve legal process in any other manner permitted by law or affect the right of the Bank to bring any action or proceeding against the Borrower, or its property in the courts of any other jurisdictions. (d) To the extent that the Borrower has or hereafter may acquire any immunity from jurisdiction of any court or f rom any legal process - 53 - whether from service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, the Borrower hereby irrevocably waives, to the extent permitted by applicable law, such immunity in respect of its obligations under this Agreement and the Note. Section 9.08. Headings. The headings and captions hereunder are for conve- nience only and shall not affect the interpretation or construction of this Agreement. Section 9.09. Severability. The provisions of this Agreement are intended to be severable. If for any reason any provision of this Agreement shall be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction. Section 9.10. Integration. The Facility Documents set forth the entire agreement among the parties hereto relating to the transactions contemplated thereby and supersede any prior oral or written statements or agreements with respect to such transactions. Section 9.11. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND INTERPRETED AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK. - 54 - IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. COMFORCE GLOBAL, INC. By: Name: Christopher P. Franco Title: Executive Vice President THE CHASE MANHATTAN BANK, N.A. By: Name: Stephen M. Zajac Title: Second Vice President - 55 - List of Exhibits and Schedules Exhibits Exhibit A Form of Revolving Credit Note Exhibit B Form of Borrowing Base Certificate - to come Schedules Schedule 4.04 Litigation Schedule 4.09 Subsidiaries Schedule 4.10 List of Credit Agreements, etc. Schedule 4.22 Names - 56 - EXHIBIT A --------- REVOLVING CREDIT NOTE $2,250,000 February 29, 1996 Suffolk County, New York COMFORCE GLOBAL, INC., a corporation organized under the laws of New York (the "Borrower"), for value received, hereby promises to pay to the order of THE CHASE MANHATTAN BANK, N.A., a national banking association (the "Bank") at the Bank's office at 1 Greenway Plaza, 135 Pinelawn Road, Melville, New York 11747, on or before February 28, 1997, the principal sum of TWO MILLION TWO HUNDRED FIFTY THOUSAND DOLLARS ($2,250,000), or, if less, the amount loaned by the Bank to the Borrower pursuant to the Credit Agreement referred to below, in lawful money of the United States of America and in immediately available funds, on the date(s) and in the manner provided in said Credit Agreement. The Borrower also promises to pay interest on the unpaid principal balance hereof, for the period such balance is outstanding, at said office, in like money, at the rate of interest as provided in the Credit Agreement described below, on the date(s) and in the manner provided in said Credit Agreement. The holder of this Revolving Credit Note shall record the date and amount of each Loan made by the Bank, and the date and amount of each payment or prepayment of principal of or interest on any Loan, on the schedule attached hereto or on such computer, magnetic disk, tape or other such electronic data storage and retrieval system deemed adequate for such purpose by the Bank, in its sole and absolute discretion, which record shall constitute prima facie evidence of the accuracy of the information so recorded, but no failure so to record or any error in so recording shall affect the obligation of the Borrower to repay any such Loans, with interest thereon, as provided in the Credit Agreement or herein. This is the Note referred to in that certain Revolving Credit Agreement (as amended from time to time the "Credit Agreement") dated as of February 29, 1996 between the Borrower, and the Bank and evidences the Loans made by the Bank thereunder. All terms not defined herein shall have the meanings given to them in the Credit Agreement. The Credit Agreement provides for the acceleration of the maturity of principal upon the occurrence of certain Events of Default and for prepayments on the terms and conditions specified therein. The Borrower waives presentment, notice of dishonor, protest and any other notice or formality with respect to this Note except as may be set forth in the Credit Agreement. The terms of this Note may not be changed orally, but only by an instrument duly executed by the Borrower and the Bank. This Note shall be governed by, and interpreted and construed in accordance with, the laws of the State of New York. COMFORCE GLOBAL, INC. By:_______________________ Name: Title: - 58 - Schedule 4.04 Litigation The Guarantor, formerly known as The Lori Corporation, ("Lori"), also formerly known as APECO Corporation (and prior thereto, as American Photocopy Equipment Company), operated in excess of 20 manufacturing facilities in the United States prior to its entry in the jewelry business in 1985. The former operations of Lori included the manufacture of photocopy machines, photographics chemicals, paper coatings, pleasure boats, recreational vehicles, modular and mobile homes, marine windshields and gasoline tanks. These operations were sold or discontinued in the late 1970s and early 1980s. In addition, Lori's Rosecraft subsidiary and its predecessors formerly used its facility to manufacture, assemble and finish jewelry. Certain of these facilities may have used and/or generated hazardous materials and may have disposed of the hazardous substances, directly or through third party waste disposal firms at various off-site waste disposal locations, in most cases before laws had been enacted governing the safe disposal of hazardous substances. The number of these off-site waste disposal locations that may have been used by third party waste disposal contractors is neither known nor reasonably determinable by the Obligor. Although Lori has been notified by the Federal Environment Protection Agency that it is a potentially responsible party for the disposal of hazardous substances by its predecessor company at a site on Ninth Avenue in Gary, Indiana, it has no records indicating that it deposited hazardous substances at this site and has stated its intention to vigorously defend itself in this matter. Lori was unable to conduct a comprehensive audit of potential environmental liability at the facilities formerly owned or operated by Lori or its predecessors and their subsidiaries since it is no longer the owner or operator of most of the properties at which it or its predecessors or their affiliates conducted manufacturing operations and did not keep records of the companies with which it contracted for the disposal of wastes before such record-keeping became mandated by law. Although a comprehensive review of public records located at the state, local and Federal levels, of internal documents (if available) respecting off-site hazardous materials disposal and of available computer data bases could reveal additional potential liabilities to Lori for the costs of environmental clean-up, the cost of conducting such a review is prohibitively expensive. - 59 - Schedule 4.09 Subsidiaries Sumtech, Inc. - 60 - Schedule 4.10 Credit Arrangements and Liens A. COMFORCE Global, Inc. 1. Credit Arrangements $800,000 Line of Credit Facility with Bank as Lender 2. Liens UCC-1 Financing Statements filed in conjunction with the extension of credit by Bank referred to in part A(1) of this Schedule B. COMFORCE Corporation To the best of both Obligors' knowledge, the following Credit Arrangements and Liens exist: 1. Credit Arrangements See Schedule A appended hereto and incorporated by reference 2. Liens UCC-1 Financing Statement filed January 9, 1996 at File No. 96-000253 in Nassau County, New York listing Bankers Capital, Northbrook, IL as Secured Party - 61 - Schedule 4.22 Previous Names Spectrum Global Services, Inc. Yield Global, Inc. Yield, Inc. - 62 - -----END PRIVACY-ENHANCED MESSAGE-----